Corporate

Querist : Anonymous (Querist) 02 September 2011 This query is : Resolved
do the preference shares before converting into equity shares has to be converted into ordinary shares??if yes what are the conditions

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Sailesh Kumar Shah (Expert) 02 September 2011
Section 85 of the Companies Act says only two type of shares:-
1. Preference Shares
2. Equity Shares (which is not preference Share).

prabhakar singh (Expert) 02 September 2011
ordinary shares r= 2 equity shares by meaning

can u distinguish these 2

Querist : Anonymous (Querist) 02 September 2011
that deals with public limited company..i have a query related to pvt.limited company

prabhakar singh (Expert) 02 September 2011
common=ordinary=2 equity shares, all3 are synonymous equivalent in meaning; expressing or implying the same idea.

They are not different in their meaning.

Querist : Anonymous (Querist) 02 September 2011
I did not get your question Mr.Prabhakar..Please explain it to me since i have a limted knowledge about shares

Querist : Anonymous (Querist) 02 September 2011
You meant ordinary shares and equity shares are equivalent in meaning so the preference dont need to be converted into ordinary shares.

prabhakar singh (Expert) 02 September 2011
i am not here to joke with you author : Anonymous,no coaching is being run here.Study company law and rules to gain knowledge,moreover learn to behave author : Anonymous !

Querist : Anonymous (Querist) 02 September 2011
you took me wrong Mr.Prabhakar..I genuinely meant that I didnot understand..I am sorry If I hurt You in anyway..

prabhakar singh (Expert) 02 September 2011
"i have a query related to pvt.limited company"

That for desired conversion,The following are the step wise procedure one need to take in respect of a pvt.limited company:
1. Conduct a board meeting
2. Call Preference shareholders meeting and take their consent in the meeting for the shares to be redeemed (make sure about the dividends being paid if not take their consent in that regard as well).
3. Pay dividend and DD tax.
4. Call EGM, confirm the decision of preference shareholders, take care of the debt equity ratio, increase the authorised capital if needed.
5. Create Capital Redumption reserve.
6. Pay the shareholders and make the relevant entries in the members register.
NOTE if dividend can be paid due to a loss making company then take consent in writing for foregoing the dividend.

Raj Kumar Makkad (Expert) 02 September 2011
In response to your simple query my reply is that

preference shares are converted into equity shares which are also called as ordinary shares.

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