Preference Financing
Preference Financing– Overview
Preference financing is a form of equity funding where a company raises capital by issuing preference shares instead of ordinary equity shares. Preference shareholders enjoy certain benefits such as priority in dividend payments and repayment in case of liquidation, making this an attractive option for investors who want relatively lower risk while still supporting a startup or Section-8 company. For founders, preference share financing allows raising funds without immediately diluting voting control.
At Cardiff Services, we provide end-to-end support for preference share financing, from structuring the issue and preparing valuation reports to drafting agreements and ensuring compliance with the Companies Act, Income Tax Act, FEMA, and MCA/ROC filings. This makes preference financing a well-balanced funding option for startups, social enterprises, and Section-8 companies in India.
Why Choose Cardiff Services for Preference Financing
At Cardiff Services, we help startups and social enterprises raise funds through preference share financing while ensuring complete legal and regulatory compliance. Our team structures deals in a way that protects founders’ control, offers investors security, and meets all statutory requirements.
From valuation reports and shareholder agreements to ROC filings and post-issue compliance, we manage the entire preference financing process seamlessly. With Cardiff Services, your organization gains access to structured capital infusion that balances investor confidence with founder flexibility.
Key Features of Preference Financing Support
Balanced Funding Route: Allows companies to raise capital while maintaining control over voting rights.
Investor Attraction: Preference shareholders get priority on dividends and liquidation proceeds, making investment safer.
Custom Structures: Advisory on redeemable, convertible, or cumulative preference shares as per business needs.
Regulatory Compliance: Ensures MCA, ROC, Income Tax, and FEMA compliances are met.
Valuation & Deal Structuring: Preparation of valuation reports and designing funding terms attractive to investors.
Post-Issue Support: Compliance with dividend distribution, redemption, and reporting requirements.
Documents Required for Preference Share Financing
Certificate of Incorporation (Private Limited / Section-8 Company).
MOA & AOA (should authorize issue of preference shares).
PAN of the company.
Board and shareholder resolutions approving preference share issue.
Valuation report by a registered valuer.
Investment/Share Subscription Agreement.
Financial statements and projections.
Updated cap table and shareholding structure.
ROC filing history (past share allotments).
FEMA/RBI approvals (if foreign investors are involved).
Step-by-Step Procedure for Preference Share Financing
Assessment of Requirement – Identify funding needs, investor expectations, and type of preference shares suitable.
Valuation & Structuring – Prepare valuation report and design terms (dividend rate, redemption terms, convertibility).
Approvals & Resolutions – Secure board and shareholder approval for the preference issue.
Drafting Agreements – Prepare Share Subscription Agreement, Shareholder Agreement, and investor terms.
Issuance & Allotment – Issue preference shares to investors and update registers.
ROC/MCA Filings – File necessary forms with the Registrar of Companies.
FEMA Compliance – For foreign preference investors, complete RBI/FEMA filings.
Post-Issue Compliance – Manage dividend distribution, redemption, or conversion as per agreed terms.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms