The Articles of Association must authorise the issue of such equity shares

(i) The Articles of Association must authorise the issue of such equity shares with differential rights (otherwise, articles will have to be amended first).

(ii) The approval of sharF-holders, for issuing such shares with differential rights shoul? be obtained in general meeting by passing an ordinary resolution.

(iii) Every conpany limite by shares can issue “equity shares with differential rights’ as to voting, dividend or otherwise only to the

extent of 25 per cent of total share capital issued.

(iv) The issuing companYI should have distributable profits for the preceding three years in terms of Sec 205, preceding the financial year in which such

shres are decided to be issued.

(v) The company has not defaulted in flling annual accounts and annual returns for three financia! ye.1rs inunediately preceding the financial year in which

it is decided to issue such shares.

(vi) The company has not failed to repay its deposits with interest on due dates or receem its debentures on due date or pay dividend.

(vii) The ordinary resolution referred to above must, inter-alia, provide for (a) the rate of voting right and (b) the rate of addi tional dividend which the equity

capital with differential voting rights shall CHery. The resolution shall also increase the autorised share capital of the company uls 94(1) and (2) in the

general meeting.

(viii) The company shall not convert its equity capital with voting rights into equity share capital with differential voting rights and viceversa.

(ix) The holders of equity shares with differential rights as to voting or dividend shall be entitled to bonus shares and right shares of the same class 2^nd

shall’ enjoy all rights as a member except with differential voting rights.

(x) The company has not been convicted of any offence under SEBI

It is here interesting to note that now a company can issue equity shares with full voting rights or equity shares with non-voting rights. Nor.voting equity

shares shall carry additional rate of dividend. These shares will be preferred by those who are not interested in attending meetings of the company and the

company has a good track record of paying good dividend.