Types of Shares a Public Limited Company Can Issue

Introduction
A Public Limited Company (PLC) is empowered to raise capital from the public by issuing different types of shares. These shares represent units of ownership and entitle shareholders to various rights such as voting, dividends, and a claim on company assets in case of liquidation. The Companies Act, 2013 provides a legal framework that allows Public Limited Companies in India to issue different classes of shares based on their characteristics and shareholder entitlements. Understanding the types of shares a Public Limited Company can issue is essential for investors, promoters, and corporate professionals alike.

Equity Shares
Equity shares, also known as ordinary shares, form the core ownership of a Public Limited Company. These shares carry voting rights and entitle holders to dividends declared by the company. Equity shareholders are the real owners and have control over company decisions through their voting power. However, they bear the highest risk as they are paid last during liquidation after all debts and liabilities are settled.

Equity Shares with Differential Voting Rights (DVRs)
A Public Limited Company may issue equity shares with differential voting rights as compared to ordinary shares. These DVRs may offer higher or lower voting power and may also differ in terms of dividend payouts. Such shares are useful for promoters who wish to retain control of the company while raising capital from investors with limited voting influence.

Preference Shares
Preference shares offer fixed dividends and preferential rights over equity shareholders in the distribution of profits and assets upon winding up. Although preference shareholders do not usually have voting rights, they enjoy more financial security. These shares are suitable for investors seeking stable returns rather than ownership control.

Cumulative Preference Shares
In the case of cumulative preference shares, if the company fails to pay dividends in a particular year due to insufficient profits, the unpaid dividends are carried forward and paid in subsequent years before any dividend is paid to equity shareholders. This ensures that shareholders receive their due income eventually.

Non-Cumulative Preference Shares
Non-cumulative preference shares do not have the right to accumulate unpaid dividends. If the company does not declare a dividend in a particular year, the shareholders lose the right to claim that year’s dividend. These shares are more suitable for companies with stable and predictable earnings.

Redeemable Preference Shares
These are preference shares that the company can redeem or buy back after a certain period or on a fixed date as per the terms of issue. The redemption must be done from the company’s profits or out of the proceeds of a fresh issue. Redeemable preference shares are often issued to meet temporary funding needs.

Irredeemable Preference Shares
While these shares cannot be redeemed during the lifetime of the company, the Companies Act, 2013 prohibits Indian companies from issuing irredeemable preference shares. All preference shares issued must be redeemable within a period not exceeding 20 years from the date of issue.

Bonus Shares
Bonus shares are issued by a company to its existing shareholders from its free reserves or retained earnings. These shares are offered without any additional cost and serve as a reward to shareholders. Bonus shares increase the number of shares held but do not affect the overall value of ownership.

Conclusion
Public Limited Companies have the flexibility to issue various types of shares to meet their capital needs and investment strategies. Equity shares provide ownership and control, while preference shares offer fixed returns and financial priority. Through the strategic use of these different share types, companies can balance the interests of investors, maintain promoter control, and support long-term growth. The ability to tailor share classes makes the Public Limited Company structure one of the most versatile options for raising capital in the corporate world.

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