(a). A preference share is a share by whatever name designated in the Regulations of a company limited by shares which does not entitle the holder of the share to a right to participate beyond a specified amount in a distribution whether by way of dividend or redemption in a winding up or otherwise, and any other share shall be referred to as an equity share. The young preferential shareholders are therefore, not entitled to further participation in the equity share or ordinary share remaining.

(b). Section 28 of ACT 179 provides that before a company limited by shares can transact business, exercise any borrowing power, or incur indebtedness:

1. There shall have been paid to it for issue of its shares, consideration to the value of at least a prescribed amount. Of the consideration paid, at least a prescribed lesser amount shall have been paid in cash.
2. The company has delivered to the Registrar of Companies for registration a declaration in the prescribed form, signed by all the directors and secretary of the company verifying that payments have been received.