There are eight types of preference shares : 
(i) Cumulative Preference shares :
As the word indicates, all dividends are carried forward until specified, and paid out only at the end of the specified period.
(ii) Non-Cumulative Preference shares :
The opposite of cumulative, obviously. Dividends are paid out of profits for every year. There are no arrears carried over a time period to be paid at the end of the term
(iii) Redeemable Preference shares :
Such preference shares can be claimed after a fixed period or after giving due notice.
(iv) Non-Redeemable Preference shares :
Such shares cannot be redeemed during the lifetime of the company, but can only be obtained at the time of winding up (liquidation) of assets.
(v) Convertible Preference shares :
These shares can be converted into equity shares after a tinme period or as per theconditions laid doWn in the terms.
(vi) Non-convertible Prcference shares :
Non-convertible preference shares cannot be, at any time , converted into equity shares.
(vi) Participating Preference Shares :
Such shares have the right toparticipate in any additional profits, after paying the equity shareholders.
(viii) Non-Participating Preference shares :
Non-participating preference shares do not possess any right to participate in surplus profits or any surplus gained at the timeof liquidation of the company.

Condition stipulated for capital subscription
(i) The fulfilling formalities to raise necessary capital.
(ii) Adhering to SEBI guidelines in this regard.
(iii) Fulfilling the condition for valid allotment by director.
(iv) Filing allotment return with the Registrar.

(i) When the share are issued at a price below the face value they are said to be issued at a discount.
(ii) For example, a share having the face value of Rs 10 is issued at Rs. 8.
(iii) The companies act 2013, prohibits the issue of shares at discount (section 53) except sweat Equity share.

When shares are issued at a price above the face or nominal value, they are said to be issued at a premium. For example, a share having the face value of Rs. 10 is issued at Rs.12. Here, Rs.2 is the premium. The amount of share premium has to betransferred to an account called the 'Securities Premium Account! This account is capital in nature and can only be utilized for the purposes specified by the Act.999
(i) To write off preliminary expenses.
(ii) To write off the expenses of issue, or commission paid, or. discount allowed, on issue of shares or debentures of the company.
(iii) To provide for the payment of premium on the redemption of any redeemable preference shares or debentures of the company.
Thus, securities premium is not available for distribution of dividend.

(i) The definition of the term 'Share' under the Companies Act, 1956 (section 2(46)) includes stock.
(ii) A company can convert its shares into stock and vice versa by following the provisions of Table A (Article 36 - 39).
(iii) Stock is created from fully paid shares by passing an ordinary resolution in the general meeting.
(iv) The Article of Association of the company must permit this conversion.

As per section 11 of the Act, a company having share capital should file with the Registrar, declaration stating that
(i) Every subscriber to the Memorandum has paid the value of shares agreed to be taken by him.
(ii) Paidup capital is not less than Rs.5 lakhs in the case of a public limited company and Rs.1 lakh in the case of private limited company.
(iii) It has filed the Registrar the verification of the registered office.
These restrictions in section 11 are applicable to companies having share capital. It can commence business only after fulfilling all the formalities mentioned above and exercise borrowing powers immediately after incorporation.

Debenture is a document issued by the company for acknowledging the loan from the public.Debentures are generally classified into different categories on the basis of :
(i) Convertibility ofthe Instrument
(ii) Sccurity of the Instrument
(iii) Redemption ability, and
(iv) Registration of Instrument.
(i) On the basis of convertibility :
(a) Non-convertible debentures : These instruments cannot be converted into equity shares.
(b) Partly convertible debentures : A part of these instruments are converted into equity shares.
(c) Fully convertible debentures : These are fully convertible into equity shares.
(d) Optionally convertibility debentures : The investor can have the option to either convert the debentures at a price decided by the issuer or agreed upon at the time of issue.
(ii) On the basis of security :
(a) Secured debentures : These instruments are secured by a charge on the fixed assets of the issuer company.
(b) Unsecured debentures : These instruments are unsecured against the assets.
(iii) On the basis Redeemability :
(a) Redeemable debentures : It refers to the debentures which will be redeemed in future.
(b) Irredeemable debentures : It is a debenture, in which no specific time is specified by the companies to pay back the money.
(iv) On the basis of Registration, debentures may be classified as:
(a) Registered debentures : These are ssued in the name of a particular person, who registered by the company.
(b) Bearer debentures : These are issued to the bearer and are negotiable. Instruments, and are transterred by mere delivery.
 

'Formation of a company' has been divided into four stages: 1. Promotion 2. Registration 3. Capital subscription and 4. Commencement of business.
1. Promotion : Promotion stage begins when the idea to form company comes in the mind of a person. The Person who envisages the idea is called promoter.
2. Registration : The second stage in the formation of the company is incorporation on registration. In this stage the promoter does the following.
(i) Application for availability of name of company
(ii) Preparations of memorandum and articles of association.
(iii) Declaration from the professional, etc.
3. Capital Subscription : Both private company and public company not having share capital can commence its business after the completion of the above stages.
But a public limited company having its share capital has to pass through two more stages:
Example
(i) The fulfilling formalities to raise necessary capital
(ii) Fulfilling the condition for valid allotment by director.
(iii) Despatch allotment letters to allottees.
4. Commencement : As per section 11 of the Act, a company having share capital should file with the registrar declaration starting that
(i) Every subscriber to the memorandum has paid the value of shares agreed to be taken by him.
(ii) Paid up capital is not less than Rs 5 lakhs in the case of public limited company and Rs. 1 lakh in the case of private limited company.
(iii) It has filed the Registrar the verification of the Registered Office.