CSEET · Business Laws and Management · Elements of Company Law
Statement I: Equity share capital, for a company limited by shares, means all share capital which is not preference share capital. Statement II: Equity share capital can only carry voting rights and can never carry differential rights as to dividend. Which is correct?
Only Statement I is correct. Equity share capital is all share capital that is not preference capital. It may carry voting rights or differential rights as to dividend, voting or otherwise under prescribed rules, so the claim that it cannot have differential rights is wrong.
- ABoth statements are correct
- BOnly Statement I is correctCorrect
- COnly Statement II is correct
- DBoth statements are incorrect
Explanation
Under Section 43, equity capital means all share capital that is not preference capital, so Statement I is correct. Equity capital may be with voting rights or with differential rights as to dividend, voting or otherwise per prescribed rules, so Statement II is wrong.
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