Class 12 Secretarial Practice Important Questions 2026 HSC Maharashtra Board

Q. 8. Answer the following questions (Any ONE) :

What is an equity share? Explain its features.
What are Preference Shares? Explain its features.
Define preference shares. What are the different types of preference shares?
Explain the provisions of Companies Act, 2013 for issue of debentures.
Explain the procedure for allotment of shares.
Explain the statutory provisions for allotment of shares.
What is Debenture? Discuss the different types of debentures.
Define Debenture and explain the features of debentures.

sp important question 2026

1) What is an Equity Share? Explain its Features.

Meaning of Equity Shares

According to the Companies Act, equity shares are those shares which are not preference shares.
They represent the ownership of the company. Equity shareholders are its real owners, controllers, and risk-bearers. They receive dividend at a fluctuating rate, depending upon profits.

📍 Example:
If Reliance issues 1 crore equity shares of ₹10 each, anyone who buys those shares becomes an owner of Reliance.

Features of Equity Shares

Permanent Capital: Equity share capital remains with the company throughout its life. It is not repaid except at winding up or buyback. This provides long-term financial stability.

Example: Tata Motors cannot repay the equity capital to shareholders unless the company is dissolved.

Fluctuating Dividend: The rate of dividend is not fixed. It depends on the company’s profitability. If profits are high, shareholders may receive higher dividends; if profits are low, dividends may be reduced or skipped.

✔ Example:
Infosys gives 20% dividend one year and 30% the next year based on profits.

Basic Rights of Shareholders: Equity shareholders enjoy important rights such as:

Right to vote

Right to share profit

Right to inspect statutory books

Right to transfer shares

These rights ensure that they participate actively in company affairs.

✔ Example:
At the Annual General Meeting (AGM), equity shareholders vote for a new Board of Directors.

No Preferential Rights: Equity shareholders receive dividends after preference shareholders. They are also last in line during winding up. Hence, they bear the highest risk.

✔ Example:
If a company shuts down, payments are made first to creditors and preference shareholders. Equity shareholders get whatever remains.

Controlling Power: Equity shareholders elect the Board of Directors. Through voting, they control policies, strategies, and decisions. Therefore, they are called the “real masters” of the company.

✔ Example:
Shareholder groups like LIC decide major company decisions by voting at AGMs.

Residual Claimants: They receive whatever remains after paying creditors, debenture interest, expenses, taxes, and preference dividend. This makes their return uncertain but potentially high.

✔ Example:
After paying taxes, debenture interest, and preference dividend, the remaining profit is distributed among equity shareholders.

No Charge on Assets: Equity shares do not create any charge or claim on company assets. Hence, they provide unsecured, flexible capital.

✔ Example:
If HDFC Bank issues equity shares, it doesn’t mortgage assets for raising equity.

Bonus Shares: Equity shareholders may receive bonus shares issued from accumulated reserves.
This increases their investment at no extra cost.

✔ Example:
TCS issued 1:1 bonus shares to its equity shareholders.

Right Issue: When a company raises additional capital, existing shareholders are given priority through Rights Issue, in proportion to their holdings.

✔ Example:
Reliance issued rights shares in 2020 (RIL Rights Issue), giving priority to existing shareholders.

Low Face Value: The face value is small, usually ₹10 or ₹1, making investment affordable for common investors.

✔ Example:
Most companies issue equity shares with ₹1 or ₹10 face value.

High Market Fluctuation: Demand and supply, profit trends, and market sentiment cause equity share prices to fluctuate frequently.

✔ Example:
HDFC Bank share price keeps changing daily depending on demand and supply.

Capital Appreciation: If the company performs well, the market value of its shares increases, giving shareholders capital gains.

✔ Example:
A share bought at ₹300 can rise to ₹900 due to company growth.

2) What are Preference Shares? Explain Its Features.

Meaning

Preference shares are those shares that enjoy two preferential rights:

Preference in payment of dividend at a fixed rate.
Preference in repayment of capital at winding up.

They provide fixed income and lower risk. Preference shares give shareholders priority in dividend and repayment of capital.

📍 Example:
If a company issues Preference Shares with 12% dividend, the holder will get 12% dividend every year before equity shareholders.

Features of Preference Shares

Preferential Dividend: Dividend is paid first to preference shareholders. They receive dividends before equity shareholders. Dividend is paid at a predetermined fixed rate.

✔ Example:
If a company has ₹50 lakh profit, it will first pay 12% preference dividend.

Preference in Repayment of Capital: At the time of liquidation, preference shareholders are paid before equity shareholders, reducing risk.

✔ Example:
If a company is winding up, ₹1 crore preference capital is repaid before equity capital.

Fixed Rate of Return: The Dividend rate is stable and known in advance. This attracts cautious investors who prefer steady income.

✔ Example:
A 10% preference share guarantees a 10% dividend every year.

Non-permanent Capital: Most preference shares are redeemable, meaning they are repaid after a specific period. Companies cannot issue irredeemable preference shares (as per the Companies Act, 2013).

✔ Example:
A company issues 5-year redeemable preference shares that will be repaid after 5 years.

Limited Voting Rights: They do not have regular voting rights. Voting is allowed only on matters affecting their interest or when a dividend is unpaid for two consecutive years.

✔ Example:
They vote only when their dividend is unpaid for 2 years or when any decision affects their rights.

Stable Market Value: Since the dividend is fixed, the market value does not fluctuate like equity shares.

✔ Example:
A 12% preference share remains stable because the return is fixed.

Low Risk Investment: Because of fixed dividends and capital safety, preference shares are less risky.

✔ Example:
Investors wanting a safe income prefer preference shares over equity shares.

Higher Face Value: They usually have a face value of ₹100, which is higher compared to equity shares.

✔ Example:
Preference shares are usually ₹100 each, unlike equity which is ₹1 or ₹10.

Not Eligible for Bonus or Right Issue: Preference shareholders cannot get bonus shares or right issue benefits.

Suitable for Conservative Investors: People who want regular and safe returns prefer preference shares.

3) Define Preference Shares. What are the Different Types of Preference Shares?

Definition

Preference shares are those shares that give the shareholder priority in receiving:

Dividend at a fixed rate
Capital repayment at winding up

They are midway between equity shares and debentures.

Types of Preference Shares

Cumulative Preference Shares: Unpaid dividend accumulates and is carried forward. Arrears are paid when profits are available. ✔ Example: If a company cannot pay 10% dividend this year, it will pay next year.

Non-Cumulative Preference Shares: Dividend does not accumulate. If profit is insufficient, dividend for that year is lost.✔ Example: If company earns no profit this year, dividend is lost permanently.

Participating Preference Shares: These shareholders participate in surplus profit, after equity shareholders receive dividend. ✔ Example: After paying equity dividend, remaining profit is shared with participating preference shareholders.
Non-Participating Preference Shares: They get only fixed dividend; no share in surplus profits. ✔ Example: 10% fixed dividend, no extra profit sharing.
Convertible Preference Shares: Can be converted into equity shares after a specific period. ✔ Example:
After 5 years, preference shares convert into equity shares of the company.
Non-Convertible Preference Shares: Cannot be converted into equity shares. ✔ Example: A 10-year 8% preference share remains preference forever.
Redeemable Preference Shares: Can be repaid after a fixed period. Only redeemable preference shares can be issued under the Companies Act. ✔ Example: Company redeems preference shares after 7 years.
Irredeemable Preference Shares: Cannot be repaid during the life of the company. (But such shares cannot be issued as per Companies Act, 2013.) ✔ Example: No company in India can issue irredeemable preference shares.

4) Define Debenture and Explain its Features.

Meaning / Definition

A debenture is a written acknowledgment of debt issued by a company.
It promises to repay a fixed amount after a specific period and also to pay interest at a fixed rate.

📍 Example:
A company issues 12% debentures of ₹1,00,000 — meaning it must pay 12% interest every year and repay principal on maturity.

Features of Debentures

Promise to Pay: Debenture certifies that the company owes money to the holder. ✔ Example: If Tata issues a ₹5 lakh debenture, it promises to repay ₹5 lakh after maturity.
High Face Value: Normally issued with ₹100 or multiples as face value. ✔ Example: Most debentures are issued in ₹100 or ₹1000 denominations.
Fixed Interest: Interest is paid at a fixed rate, even if the company makes no profit. ✔ Example: A 10% debenture guarantees 10% interest, even if the company earns no profit.
Repayment on Maturity Principal amount is repaid on the maturity date. ✔ Example: A 5-year debenture will be repaid exactly after 5 years.
Priority in Repayment: Debentureholders are paid before shareholders. ✔ Example: During winding up, creditors and debentureholders are paid before shareholders.
Creditor Status: Debentureholders are creditors; hence, they do not control the company. ✔ Example: Debentureholders lend money to the company but do not own it.
No Voting Rights (Sec 71): Debentures cannot carry voting rights. ✔ Example: Debentureholders cannot vote in general meetings.
Security: Debentures are usually secured by fixed or floating charge on assets. ✔ Example: A company may mortgage land/building to issue secured debentures.
Debenture Trustee: When issued to more than 500 people, trustees must be appointed to protect debentureholders. ✔ Example: If a company issues debentures to 500+ people, it must appoint a trustee like SBI CAP Trustee Company Ltd.
Transferability: Debentures can be freely transferred by delivery or transfer deed. ✔ Example: Bearer debentures can be transferred simply by handing over the certificate.

Q5 What is Debenture? Explain the Different Types of Debentures.

Meaning of Debenture

A debenture is a document that acknowledges a debt taken by a company.
It carries a fixed rate of interest and is repayable on a fixed date.

📌 Example:

A company issues 12% debentures of ₹1,00,000 — it must pay ₹12,000 interest yearly.

Types of Debentures

On the basis of Security:

Secured Debentures – These debentures are backed by company assets. If company fails to pay, assets can be sold to repay debentureholders. backed by charge on assets. Example: Factory building is mortgaged for issuing secured debentures.
Unsecured Debentures – no security. Issued without any asset security. Depend entirely on company’s goodwill and repayment capacity. Example: Companies with strong credit ratings issue unsecured debentures.

On the basis of Transfer:

Registered Debentures – holder’s name registered. Name of holder registered with company. Transfer requires filling a transfer deed. Example: Company records name and address of registered debentureholder.
Bearer Debentures – transferable by delivery. Transferable by simple delivery. No need to inform the company. ✔ Example: Person holding physical certificate is treated as owner.

On the basis of Repayment:

Redeemable Debentures – repaid on maturity. Repaid after a fixed period. Most common type. ✔ Example: Company issues 10-year debentures repayable in 2035.
Irredeemable Debentures – repaid only at winding up. Repaid only at winding up.
Not common today. ✔ Example: Company repays irredeemable debentures only when it closes down.

On the basis of Conversion

Convertible Debentures – can be converted into equity shares. Offer the benefits of both debt and ownership. ✔ Example: A CCD converts into 10 equity shares after 3 years.
Non-Convertible Debentures – Cannot be converted. They provide fixed returns and are safer. ✔ Example: Tata Capital launches NCDs at 9% interest.

Q6 Provisions of Companies Act, 2013 for Issue of Debentures

Authority to Issue (Sec 179): The Board of Directors has the authority to issue debentures. They approve amount, terms, interest rate, and trustee appointment. ✔ Example: Board passes a resolution approving ₹200 crore debenture issue.
No Voting Rights (Sec 71): Debentures do not carry voting rights under any circumstances. This maintains separation between creditors and owners. ✔ Example: Debentureholders cannot vote in AGM even if their investment is large.
Debenture Trustee Appointment: Mandatory when debentures are offered to more than 500 persons. Trustee protects the interest of debentureholders. ✔ Example: SBI CAP Trustee Company ensures company repays debentures on time.
Creation of Debenture Redemption Reserve (DRR): A company must create DRR to protect debentureholders. Companies must create a DRR for secured redemption. It ensures money is available at maturity. ✔ Example: Company transfers a part of its profit yearly to DRR.
Security for Debentures/ Secured and Unsecured Debentures: Company may issue secured or unsecured debentures. Security may be fixed or floating charge. ✔ Example: Factory building is mortgaged to issue secured debentures.
Issue of Convertible Debentures: Needs approval through special resolution. Requires special resolution from shareholders. Convertible debentures dilute ownership after conversion. ✔ Example: Company issues CCDs converting into equity after 3 years.
Credit Rating: Mandatory to obtain credit rating before issuing debentures. It helps investors understand company’s repayment capacity. ✔ Example: CRISIL AAA rating indicates the safest investment.
Redemption: Debentures must be repaid on maturity date according to the terms. Delay attracts legal consequences and penalty. ✔ Example: Company repays ₹500 crore debentures exactly 5 years after issue.

Q7. Procedure for Allotment of Shares

Receipt of Application: Investors submit share applications with application money. Company receives thousands of applications during public issue. ✔ Example: A company issues 1 lakh shares but receives 3 lakh applications.
Scrutiny of Applications: Applications are checked for correctness. Applications are checked for errors, incomplete forms, or invalid entries. Incorrect applications are rejected. ✔ Example: Forms without signatures or wrong bank details are rejected.
Board Meeting: Board passes resolution for allotment. Directors decide allotment depending on subscription level. They may allot fully, proportionately, or reject oversubscribed applications. ✔ Example: If issue is oversubscribed 3 times, only 1/3rd shares allotted to each investor.
Allotment List: A list of applicants to whom shares are allotted is prepared. Company prepares a list of selected applicants. It includes names, addresses, number of shares allotted. ✔ Example: Applicant requesting 300 shares may receive only 100 shares.
Issue of Allotment Letters: Allotment letters are sent to successful applicants. A formal communication is sent to successful applicants. It confirms the number of shares allotted. ✔ Example: Applicants receive allotment confirmation via email and post.
Filing Return of Allotment: Company files Return of Allotment with Registrar of Companies within 30 days. This provides transparency and legal compliance. ✔ Example: Form PAS-3 is filed with ROC.
Making Entries in Register of Members: Names of shareholders entered in Register of Members. Details of shareholders are recorded in Register of Members. Only after this, a person becomes a legal shareholder. ✔ Example: Company records name, PAN, address, and number of shares.
Issue of Share Certificates: Share certificates are issued within statutory time. Certificates issued within 2 months of allotment. It is a legal proof of share ownership. ✔ Example: If allotment is on 1 April, certificates must be issued before 1 June.

12th HSC Secretarial Practice Important Questions 2025

Q.2 Explain the following terms / concepts.

Fixed capital
Working capital
Borrowed capital
Owned capital
Depository system
Overdraft
Transmission of shares
Bonus shares
Secondary Market
Allotment of shares
Employee Stock Option Scheme
Employee Stock Purchase Scheme
Rights Issue
Minimum subscription
Debenture certificate
Charge on assets
Credit rating
Eligible Public Company
Secured Deposit
Deposit Receipt
Correct information
Courtesy
Dematerialization
ISIN
Dividend
Interest
Final Dividend
Interim Dividend
Financial market
Capital market
Stock exchange

Answers: Click HERE

Q.4 Distinguish between the following. [12 Marks]

Equity shares and Preference shares.
Fixed capital and Working Capital
Owned capital and borrowed capital.
Right Shares and Bonus Shares
Share and Debenture.
Transfer of shares and transmission of Shares
Final Dividend and Interim Dividend
dividend and Interest
Primary market and Secondary market.
Money market and Capital market.

Answers Click HERE

Q.5 Answer in brief. [8 Marks]

Explain the Employee Stock Option Scheme
State the functions of SEBI.
Discuss the importance of corporate finance.
State any four features of the Stock Exchange.
Explain the functions of the Stock Exchange.
State any four terms and conditions regarding acceptance of deposits
Explain any four advantages of the depository system to investors/ company
State any four provisions of the Companies Act 2013 for the issue of debentures.
State the features of Bonds.
State the provisions for Rights Issues.
State any four factors affecting fixed capital requirement.
What is Global Depository Receipt?
What is American Depositary Receipt?
Explain the provisions related to circulars or advertisements for inviting deposits.

Q.6 Justify the following statements. [8 Marks]

Equity share capital is risk capital.
Financial markets act as a link between investor and borrower.
Bond holder is a creditor of the company.
Capital market is useful for corporate sector.
The Board of Directors can refuse transfer of shares.
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India.
Preference shares do not carry any voting rights.
Fixed capital stays in the business almost permanently.
There are various factors affecting the requirement of working capital.
Equity shareholders are real owners and controllers of the company.
Stock exchanges work for the growth of the Indian economy

Q.7 Attempt the following. [10 Marks]

Write a letter to the member for the payment of the Interim dividend electronically.
Write a letter to the depositor regarding the renewal of his deposit.
Draft a letter of thanks to the depositor of a company.
Write a letter to the shareholder regarding the issue of Bonus Shares.
Draft a letter of allotment to the debenture holder.
Write a letter to the member for the issue of the Share Certificate.
Write a letter to the member for the payment of dividends through a Dividend Warrant.

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12th HSC Secretarial Practice Important Questions 2026 Maharashtra Board Commerce class 12

Class 12 Secretarial Practice Important Questions 2026 HSC Maharashtra Board