Section 43 of CA 2013 : Section 43: Kinds Of Share Capital

Explanation using Example

Imagine a company called "DreamTech Innovations Pvt. Ltd." which is limited by shares. The company decides to raise capital for expansion. It offers two types of shares:

1. Equity shares with voting rights: These shares give investors a say in company decisions at shareholder meetings, but dividends are not guaranteed and depend on company profits.
2. Preference shares: These shares offer investors a fixed dividend payout, making them attractive to those seeking regular income. Preference shareholders, however, typically don't have voting rights like equity shareholders do.

Mr. John, an investor, decides to buy preference shares because he wants a steady dividend income, knowing that in case DreamTech winds up, he will be paid back his investment before equity shareholders are considered.