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Question
Explain different Kinds of Preference shares.
Solution
There are eight types of preference shares:
- Cumulative Preference shares: As the word indicates, all dividends are carried forward until specified.
- Non-cumulative Preference shares: These are the opposite of cumulative.
- Redeemable Preference shares: Such preference shares can be claimed after a fixed period or after giving due notice. ,
- Non-Redeemable Preference shares: Such shares cannot be redeemed during the lifetime of the company.
- Convertible Preference shares: The shares can be converted into equity shares after a time period.
- Non-convertible Preference shares: Non-convertible preference shares cannot be, at any time, converted into equity shares.
- Participating Preference shares.
- Non-Participating Preference shares.
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Company received excess application for 5000 shares @ ₹4 per share. Applications of 1000 shares were rejected and pro-rata allotment was made. Calculated the amount of application money adjusted with allotment.
Ajita Ltd. issued 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable as:
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Rakesh Ltd. issued 2,000 Equity Shares of 100 each at a premium oH 20 per share payable as follows:
| On Application | ₹ 20 |
| On Allotment | ₹ 50 (Including Premium) |
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| On Final Call | ₹ 30 |
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All amounts were duly received except Mr. Mondor to whom 80 shares were alloted. Mandar fails to pay First and Final Call. His shares were forfeited and were reissued to Mr. Ketan as fully paid at ₹ 80 per share.
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10,000 equity shares of ₹ 100 each issued and fully subscribed and called-up at 20% premium. Calculate equity share capital and share premium amount.
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