Preference shareholder can be member?

[CS Ankit Misra]

Dear Professionals,

An unlisted public company has 6 equity shareholders and 3 preference shareholders. Can it be correct? Can preference shareholders be counted in the definition of 'Members'?

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regards,

CS ANKIT MISRA

KANPUR

8009968692

 Please do not print this email unless absolutely necessary

[Sanjay singh]

Dear Member,

yes preference shareholders are also members of the company read section 41 of companies act 1956

Regards

sanjay

[chandrika s]

Dear Members,

 

the section 41 of the companies act 1956 reads as follows:

 

41. DEFINITION OF "MEMBER"

(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the

company, and on its registration, shall be entered as members in its register of members.

(2) Every other person who agrees in writing to become a member of a company and whose name is entered in its

register of members, shall be a member of the company.

(3) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.

the new act i.e., Companies Act, 2013 section 55 reads as follows:

(

55) “member”, in relation to a company, means—

(

i) the subscriber to the memorandum of the company who shall be deemed

to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;

(

ii) every other person who agrees in writing to become a member of the

company and whose name is entered in the register of members of the company;

(

iii) every person holding shares of the company and whose name is

entered as a beneficial owner in the records of a depository;

Now my doubt is that

a) there is no mention about the preference shareholder as member of the company, then how can preference shareholder be counted as member in this situation?

b) in both the acts the minimum number of members to be present in person is 5, then in the above case there are 6 equity shareholders. The 5 members personally present can be counted for the purpose of quorum of general meeting.

c) if the shareholder name is entered in the register of members, then only he/she shall be counted as member.

 

other views are solicited....

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Regards,
CHANDRIKA .S.

[BINDU MADHAVA]

On plain reading of section 85 of ca 1956(section 43 of ca 2013) preference shareholdets will not have voting rights.

In other words, as a public company it is better to have 7 members with equity shares to ensure no. of members with voting rights to consider quorum of 5 members.

Preference shareholders also treated as members as per section 41 and judicial pronouncements

regards
Bindu Madhava K G

[Umesh Vyas]

Dear Binduji  its difficult to belive as pref.sh holder have limited voting right in case of arrear of cumulative div. , will u please provide judicial pronouncement treating pref. Sh.holder as member? Regards, CS Umesh Vyas

[K. Sankara Subramanian]

Dear Members

I wish to share the view given by one Official at MCA. The discussion was relating to whether a Company could be incorporated with Preference Shareholders alone.

According to him, when we interpret the word 'preference shares' they are shares which yield some benefits (fixed % of Dividend, Fixed amount of Dividend, Cumulative, Conversion into Equity, Participation in the event of Winding up etc.) to holders in preference to equity holders. Hence there must be minimum of 2/ 7 members in case of Private/ Public Limited Companies respectively.

On Sat, Oct 19, 2013 at 12:30 PM, Sanjay singh <cs.kmr...@gmail.com> wrote:

[K. Sankara Subramanian]

i.e. the concept of preference comes only when there is equity. Hence there must be minimum of 2/ 7 members in case of Private/ Public Limited Companies respectively.

[CS Ankit Misra]

Yes. I also second the views of Mr. Subramanian as how will we pass resolutions relating to Ordinary / Special businesses in AGM / EGM as preference shareholders doesnt have voting rights except in case of resolutions affecting their rights ???

However, to get rid of any future litigation......i transferred shares partial shares of present shareholder to his wife as GIFT w.e.f. back date.

[Jayashree Chandrasekaran]

will you be re-filing Form 20B filed ?

Jayashree

On 10/21/13, CS Ankit Misra <ankit...@gmail.com> wrote:
> Yes. I also second the views of Mr. Subramanian as how will we pass
> resolutions relating to Ordinary / Special businesses in AGM / EGM as
> preference shareholders doesnt have voting rights except in case of
> resolutions affecting their rights ???
>
> However, to get rid of any future litigation......i transferred shares
> partial shares of present shareholder to his wife as GIFT w.e.f. back date.
>
>
> On Mon, Oct 21, 2013 at 8:59 AM, K. Sankara Subramanian <
> shankar...@gmail.com> wrote:
>
>> i.e. the concept of preference comes only when there is equity. Hence
>> there must be minimum of 2/ 7 members in case of Private/ Public Limited
>> Companies respectively.
>>
>>
>>
>>
>>

>> On Mon, Oct 21, 2013 at 8:56 AM, K. Sankara Subramanian <
>> shankar...@gmail.com> wrote:
>>
>>> Dear Members
>>>
>>> I wish to share the view given by one Official at MCA. The discussion
>>> was
>>> relating to whether a Company could be incorporated with Preference
>>> Shareholders alone.
>>>
>>> According to him, when we interpret the word 'preference shares' they
>>> are
>>> shares which yield some benefits (fixed % of Dividend, Fixed amount of
>>> Dividend, Cumulative, Conversion into Equity, Participation in the event
>>> of
>>> Winding up etc.) to holders in preference to equity holders. Hence there
>>> must be minimum of 2/ 7 members in case of Private/ Public Limited
>>> Companies respectively.
>>>
>>>
>>>
>>>
>>>

>>> On Sat, Oct 19, 2013 at 12:30 PM, Sanjay singh
>>> <cs.kmr...@gmail.com>wrote:
>>>
>>>> Dear Member,
>>>>
>>>> yes preference shareholders are also members of the company read
>>>> section
>>>> 41 of companies act 1956
>>>>
>>>>
>>>> Regards
>>>> sanjay
>>>>
>>>> On Friday, 18 October 2013 16:15:59 UTC+5:30, ankit wrote:
>>>>>
>>>>> Dear Professionals,
>>>>>
>>>>> An unlisted public company has 6 equity shareholders and 3 preference
>>>>> shareholders. Can it be correct? Can preference shareholders be counted
>>>>> in
>>>>> the definition of 'Members'?
>>>>>
>>>>> --
>>>>> regards,
>>>>>
>>>>> CS ANKIT MISRA
>>>>> KANPUR
>>>>> 8009968692
>>>>>

>>>>> *
>>>>> *
>>>>> * **Please do not print this email unless absolutely necessary*
>>>>> *
>>>>> *

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C.JAYASHREE
PARTNER
S.GANESH&ASSOCIATES
CHENNAI
98840 17120

[CS Ankit Misra]

No.... luckly i yet not filed Form 20B for AGM 2013 and i came across problem while filling 20B. So made requisite changes