Share Capital Types : Equity Share Capital & Preference Share Capital

As per section 85 and section 86 of the Companies Act, 1956, there are two kind of share Capital

  1. Equity share capital
  2. Preference share capital

EQUITY share capital

EQUITY share capital is all share capital which is not preference capital means other than preference share.

As per section 86 of the Companies Act,1956 the share capital of the company limited by shares shall be of two kinds:

  1. With similar voting rights; or
  2. With differential rights as to dividend or voting

PREFERENCE share capital

It is that part of share capital of the company which is having preferential rights over equity shares of that company as regard:

  1. Dividend i.e. holders of preference shares will get a fixed amount or an amount calculated at fixed rate.
  2. Repayment of capital at the time of winding up.

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