Skip to content

CMA Intermediate · Business Laws and Ethics · Rights of Shareholders

Kaveri Ltd has paid-up equity capital of Rs 6,00,000 and paid-up preference capital of Rs 2,00,000, and the preference shareholders have a right to vote on a resolution. Under the first proviso to Section 47(2), what is the ratio of voting rights of equity shareholders to preference shareholders?

The ratio is 3 : 1. The first proviso to Section 47(2) fixes the equity to preference voting rights in the same proportion as paid-up equity capital to paid-up preference capital, and Rs 6,00,000 to Rs 2,00,000 simplifies to 3 : 1.

  1. A1 : 3
  2. B2 : 1
  3. C3 : 1Correct
  4. D1 : 1

Explanation

The proviso says the proportion of voting rights of equity to preference shareholders is the same as the proportion of paid-up equity capital to paid-up preference capital. That is 6,00,000 : 2,00,000 = 3 : 1. The reverse ratio 1 : 3 inverts the proportion, and 1 : 1 ignores capital.

Did you get it right without looking?

One question tells you little. A timed set on Rights of Shareholders shows your real accuracy, how long you take and where you lose marks.

Practise Rights of ShareholdersFree diagnostic mock

More Rights of Shareholders questions