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CSEET · Business Laws and Management · Elements of Company Law

Consider these statements about equity share capital under Section 43. I. It may be with voting rights. II. It may be with differential rights as to dividend, voting or otherwise in accordance with prescribed rules. III. It must always carry a fixed rate of dividend. Which are correct?

Only statements I and II are correct. Equity share capital may carry voting rights or differential rights as to dividend, voting or otherwise under prescribed rules. A fixed rate of dividend is a feature of preference share capital, not a requirement for equity.

  1. AI and III only
  2. BII and III only
  3. CI and II onlyCorrect
  4. DI, II and III

Explanation

Section 43(a) allows equity capital with voting rights or with differential rights as to dividend, voting or otherwise per prescribed rules. A fixed dividend rate is a mark of preference capital, so III is wrong.

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