Rupal Gambhir--
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Thanks for your reply, I am also of the same view and just wanted
other members to through a light upon the same. Actually, in our case,
the present equity shareholders themselves are willing to give their
NOC's for conversion of equity into preference.
Is the same possible.
Thanks & Regards,
Rupal Gambhir
On 1/16/12, kartheek CN <kartheek...@gmail.com> wrote:
> Dear Rupal,
>
> The Conversion of issued Equity Share Capital into Preference Shares is not
> permissible under the Companies Act, 1956.
>
> Section 106 provides for Variation of Class Rights - It doesn't provide any
> option of Conversion of issued shares into a different category of shares.
>
> The Unissued Authorized Equity Share Capital can be Re Classified as
> PREFERENCE shares Capital and subsequently be issued.
>
> *Members - *Correct me if i am wrong...!
Can you please tell me the status of your Company (listed or
unlisted). Also the number of Equity Shareholders and Preference
shareholders. Based on this, i might be able to give some way out.
Thanks
Anjali
The company is a Private Unlisted company and the number of
shareholders are five only.
Regards,
Rupal Gambhir
In this case, you can call two EGMs of Preference Shareholders as
well as Equity Shareholders and obtain their approval for company
entering into a Shareholders Agreement with the existing Equity
Shareholders. In the said agreement, you can give some privileges to
the Equity Shareholders i.e. do not change the nature of the issued
share capital, rather change the terms of issue in such a way that
your object is fulfilled. This mights attract the provisions of
section 106, so look into that section.
Pls know that i have not done anything like this and the same is based
on my personal opinion only.
Members, pls recitfy if i am wrong.
Many Thanks
In that case..? Are you of the opinion that .! The company can exist
by having only preference share capital..and zero equity
participation..?
And can the company convert part of its equity into preference..?
Kindly clarify..
C.N.Kartheek
the company can not exist with preference shares only. that is why i
suggested to give additional privileged to equity shareholders instead
of changing the nature of shares itself. since the company has only
equity share capital right now, giving additional benefits to them
will not affect the rights of any other shareholders i.e. preference
shareholders.
If you have a different opinion, pls enlighten
Anjali
Thanks a lot to both Kartheek and Anjali.