43. Kinds of share capital.
The share capital of a company limited by shares shall be of two kinds, namely:—
(a) equity share capital—
(i) with voting rights; or
(ii) with differential rights as to dividend, voting or otherwise in accordance
with such rules as may be prescribed; and
(b) preference share capital:
Provided that nothing contained in this Act shall affect the rights of the preference
shareholders who are entitled to participate in the proceeds of winding up before the
commencement of this Act.
Explanation.—For the purposes of this section,—
(i) ‘‘equity share capital’’, with reference to any company limited by shares,
means all share capital which is not preference share capital;
(ii) ‘‘preference share capital’’, with reference to any company limited by shares,
means that part of the issued share capital of the company which carries or would carry
a preferential right with respect to—
(a) payment of dividend, either as a fixed amount or an amount calculated
at a fixed rate, which may either be free of or subject to income-tax; and
(b) repayment, in the case of a winding up or repayment of capital, of the
amount of the share capital paid-up or deemed to have been paid-up, whether or
not, there is a preferential right to the payment of any fixed premium or premium
on any fixed scale, specified in the memorandum or articles of the company;
(iii) capital shall be deemed to be preference capital, notwithstanding that it is
entitled to either or both of the following rights, namely:—
(a) that in respect of dividends, in addition to the preferential rights to the
amounts specified in sub-clause (a) of clause (ii), it has a right to participate,
whether fully or to a limited extent, with capital not entitled to the preferential
right aforesaid;
(b) that in respect of capital, in addition to the preferential right to the
repayment, on a winding up, of the amounts specified in sub-clause (b) of clause
( ii), it has a right to participate, whether fully or to a limited extent, with capital
not entitled to that preferential right in any surplus which may remain after the
entire capital has been repaid.