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CS Executive · Company Law and Practice · Share and Share Capital - Concepts

Rohini Engineering Ltd wishes to issue equity shares carrying differential rights as to dividend and voting. Under Section 43(a), on what basis may equity share capital with differential rights be issued?

Equity shares with differential rights as to dividend, voting or otherwise may be issued in accordance with such rules as may be prescribed, as stated in Section 43(a)(ii). The board cannot do so freely, and the section imposes no Registrar approval or bar due to preference capital.

  1. AIn accordance with such rules as may be prescribedCorrect
  2. BFreely, at the discretion of the board without any rules
  3. COnly with the prior approval of the Registrar
  4. DOnly if the company has no preference share capital

Explanation

Section 43(a)(ii) permits equity share capital with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed. It is not left to board discretion, and the section does not require Registrar approval or absence of preference capital.

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