Learn All About Issue of Preference Shares
TOPICS : Business
Preference Shares are the type of shares issued by a company, providing fixed annual dividends to the shareholders, written on the deed of preference shares like 10% Preference shares, here 10% means that the shareholders will be getting an annual dividend at 105 of the face value marked on the shares. The company can Issue Preference Shares, after passing a resolution in the general meeting of the company regarding the changes to be made in the Article of Association of the company.Call a meeting of the directors, giving a minimum 7 days notice, stating date, time, place and agenda of the meeting beforehand.After drafting the resolution, prepare an informative statement related to the provisions listed in the ‘resolution drafted like size, number, value, price of shares, the objective and manner of issue, terms of issue and redemption, type of share, etc.
Key Points to Remember:
- Only a share-limited company can issue.
- The provision of issuing preference shares should be in the Articles of Association.
- Redeemable within 20 years of issue, generally.
Steps to Issue Preference Shares
- Call a Meeting
- Draft a Resolution
- Draft a Statement to Resolution
- Conduct the Board Meeting
- Filing Form MGT-14
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