A pure private company can issue shares of a type other than
those discussed above (s.90). Thus, it may issue what are known as deferred
shares. As deferred shares are normally held by promoters and directors of the
company, they are usually called founder's shares. They are usually of a
smaller denomination, say one rupee each. However, they are generally given equal
voting rights with equity share which may be of higher denomination, say Rs 10
each. As regard payment of dividend to holders of such shares, the articles
* Now, companies are
free to offer any percentage depending upon the market forces. usually provide
that these shares will carry a dividend fixed in relation to the profits
available after dividends have been declared on the preference and equity
shares. Thus, the promoters, founders and directors have a very direct interest
in the success of such a company; the greater the profits of the company the
higher their dividends will be.
It is to be remembered, however, that as and when the
private company converts itself into a
public company, it will have to alter its capital structure and retain only equity
share c re capital and preference share capital (including CCPs), if any.
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