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Bonus and right issue
Accountancy
Can we right issue to preference share holders?? Can we issue bonus shares to preference share holders??
Answers (2)
Best Answer
Himanshu Somani
The Act does not state any provision restricting or prohibiting bonus to preference shareholders. Further it does not expressly states that bonus shares can be issued "only" to equity shareholders. Hence, bonus shares can be issued to preference shareholders( but normally every company avoids it) Right issue can not be made to preference shareholders but preference shares can be issued as right issue to existing equity shareholders
Good response above. To add here in terns of Companies Act: 1. Sec 63 does not restrict issuing bonus shares to Preference shareholders. So it's possible. 2. Sec 62 allows right shares to be issued only to holders of equity shares. However, there is no restriction on company to issue preference shares as right shares to equity shareholders.
The Act does not state any provision restricting or prohibiting bonus to preference shareholders. Further it does not expressly states that bonus shares can be issued "only" to equity shareholders. Hence, bonus shares can be issued to preference shareholders( but normally every company avoids it) Right issue can not be made to preference shareholders but preference shares can be issued as right issue to existing equity shareholders
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