Section 2 of The Preference Shares (Regulation of Dividends) Act, 1960
In this Act, unless the context otherwise requires,--
- (a)"Companies Act," means the Companies Act, 1956 (1 of 1956);
- (b)"company" means an Indian company as defined in 2[clause (26) of section 2 of the Incometax Act, 1961 (43 of 1961) and includes a company referred to in sub-clause (ii) of clause (17)] of the said section which has made arrangements for the declaration and payment of dividends within Indian in accordance with the rules made under the said Act;
- (c)"preference share" means a share which 3*** carries, as respects dividends, a preferential right to be paid a fixed amount or an amount calculated at a fixed rate;
- (d)"previous year" has the same meaning as in the 4[Income-tax Act, 1961 (43 of 1961)];
- (e)"stipulated dividend", in relation to a preference share, means the fixed amount or the amount calculated at fixed rate which the holder of such share has a preferential right to be paid as dividend;
- (f)all other word and expressions used but not defined in this Act and defined in the Companies Act shall have the meanings respectively assigned to them in that Act.
Summary
- The Companies Act referred to in this law is the Companies Act, 1956.
- A company means an Indian company as defined in clause 26 of section 2 of the Income-tax Act, 1961, and it includes certain other companies that have made arrangements to declare and pay dividends within India.
- A preference share is defined as a share that gives the holder a preferential right, meaning a priority right, to be paid a fixed amount or an amount calculated at a fixed rate as dividends.
- The term previous year has the same meaning as it does in the Income-tax Act, 1961.
- The stipulated dividend is the specific fixed amount or the rate-based amount that a preference shareholder has a priority right to receive.
- Any other terms used in this Act that are not defined here will have the same meanings given to them in the Companies Act.
Practical examples
FAQ
1. Which Companies Act is referred to in this law?
This law refers to the Companies Act, 1956 (1 of 1956).
2. What does a preference share mean under this law?
It means a share that carries a preferential right, which is a priority right, to be paid a fixed amount or an amount calculated at a fixed rate as dividends.
3. What does the term stipulated dividend mean?
It means the fixed amount or the rate-based amount that a preference shareholder has a priority right to be paid as a dividend.
4. What happens if a term is used in this Act but is not defined in Section 2?
If a term is not defined in this Act but is defined in the Companies Act, it will carry the meaning assigned to it in the Companies Act.
Test yourself
Q1.Which year's Companies Act is defined in Section 2 of this Act?
Q2.What key right must a share carry to be called a preference share under this Act?
Q3.Under Section 2, where do we look for the definition of previous year?
Q4.What is the meaning of stipulated dividend under Section 2?
Q5.If a word is used in this Act but is not defined in Section 2, where does its meaning come from?