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CS Executive · Company Law and Practice · Members and Shareholders

Mehta Ltd has paid-up equity capital of Rs 6,00,000 and paid-up preference capital of Rs 2,00,000. On a resolution directly affecting preference rights, the combined voting is considered. What is the ratio of voting rights of equity shareholders to preference shareholders, as per the proviso to section 47(2)?

The ratio is 3:1. The proviso to section 47(2) says voting rights of equity and preference shareholders stand in the same proportion as their paid-up capital, which is Rs 6,00,000 to Rs 2,00,000, or 3:1.

  1. A1:3
  2. B2:1
  3. C3:1Correct
  4. D3:4

Explanation

The first proviso to section 47(2) fixes the ratio of voting rights of equity to preference in the same proportion as the paid-up equity capital to paid-up preference capital. That is 6,00,000 : 2,00,000 = 3:1. Reversing the ratio gives 1:3, which is wrong.

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