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A company wants to issue such shares as do not have the right of preference for payment of Annual Dividend and refund of Capital at the time of Liquidation. Identify such shares and describe any three advantages.

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By issuing Equity Shares, Company is not required to make the payment of annual dividend on preference as well as refund of capital at the time of liquidation. Advantage of issuing equity shares: i. Company is not having an obligation to pay fixed rate of dividend every year. ii. Company is not having...
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By issuing Equity Shares, Company is not required to make the payment of annual dividend on preference as well as refund of capital at the time of liquidation. Advantage of issuing equity shares:

i. Company is not having an obligation to pay fixed rate of dividend every year.

ii. Company is not having an obligation to repay the amount till liquidation.

iii. Company is not required to pledge the assets for issuing equity shares.

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Such shares are called equity shares and have following advantages: 1. They are permanent source of capital for the company. 2. Do not create charge on the assets of the company. 3. Company is under no obligation to pay fixed dividend each year.
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