CS Executive · Company Law and Practice · Share and Share Capital - Concepts
Under the Explanation to Section 43, how is 'equity share capital' of a company limited by shares defined?
Equity share capital means all share capital that is not preference share capital, as per the Explanation to Section 43. It is a residual definition, so it includes shares with voting rights as well as those with differential rights as to dividend, voting or otherwise.
- AShare capital carrying voting rights on every resolution
- BShare capital issued to promoters and founders only
- CAll share capital which is not preference share capitalCorrect
- DShare capital that carries no fixed dividend but has a premium
Explanation
The Explanation defines equity share capital as all share capital which is not preference share capital. It is a residual definition and does not depend on voting rights, who holds the shares, or premium. Equity may be with voting rights or with differential rights.
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