law: Companies Act, 1956
  Sec 85    -     Two
  
  kinds of share capital 
  (1) " Preference share capital "
  
  means, with reference to any company limited by shares, whether formed before
  
  or after the commencement of this Act, that part of the share capital of the
  
  company which fulfils both the following requirements, namely :
  (a) that as respects dividends it carries or
  
  will carry a preferential right to be paid a fixed amount or an amount
  
  calculated at a fixed rate, which may be either free of or subject to
  
  income-tax ; and
  (b) that as respect capital, it carries or
  
  will carry, on a winding up or repayment of capital, a preferential right to be
  
  repaid the amount of the capital paid-up or deemed to have been paid up,
  
  whether or not there is a preferential right to the payment of either or both
  
  of the following amounts, namely :
  (i) any money remaining unpaid, in respect of
  
  the amounts specified in clause (a), up to the date of the winding up or
  
  repayment of capital ; and
  (ii) any fixed premium or premium on any fixed
  
  scale, specified in the memorandum or articles of the company.
  Explanation. : Capital shall be
  
  deemed to be preference capital, notwithstanding that it is entitled to either
  
  or both of the following rights, namely :
  (i) that, as respects dividends, in addition
  
  to the preferential right to the amount specified in clause (a), it has a right
  
  to participate, whether fully or to a limited extent, with capital not entitled
  
  to the preferential right aforesaid ;
  (ii) that, as respects capital, in addition to
  
  the preferential right to the repayment, on a winding up, of the amounts
  
  specified in clause (b), it has a right to participate, whether fully or to a
  
  limited extent, with capital not entitled to the preferential right in any
  
  surplus which may remain after the entire capital has been repaid.
  (2) " Equity share capital " means,
  
  with reference to any such company, all share capital which is not preference
  
  share capital.
  (3) The expression " preference share
  
  " and " equity share " shall be construed accordingly.