Issuance of Preference Shares

[JOHN SHANNEL]

Can a Holding Company issue preference share to a subsidiary company.

Is there any limit for issuing the preference share Capital.

John Shannel

[CA Rachit Agarwal]

Holding Company can issue Preference Shares to Subsidiary Company. There is no restrictions as per the Companies Act, 1956.

However please also refer "Preferential Allotment (Unlisted Public Companies) Rules".

As regarding the limit please get compliance for the provisions of

Section 81(1A)- Further issue of Capital

Section 372A- Inter-Corporate Loans & Investments and other appliable provisions of the companies act.

AI Summary

Preference shares can be issued by a holding company to its subsidiary, subject to preferential allotment rules and statutory compliance. A holding company may issue preference shares to its subsidiary; there is no prohibition under the Companies Act, 1956. Such issuances must comply with the Preferential Allotment (Unlisted Public Companies) Rules and applicable statutory provisions governing further issue of capital and inter-corporate loans and investments, including Section 81(1A) and Section 372A, and other relevant Companies Act provisions.