Question

XYZ Co. is a holding of XZ Pvt. Company. XZ Co. issued deferred shares. The issue is valid or void
2 points

Answer 1

Answer:

possibly

Explanation:

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Answer 2

The issue is void since XYZ Company is a holding of XZ Private Company.

• Since XYZ Co. is a holding of XZ Pvt. company, it only buys and owns shares and has no other business with the company.
• Since XZ Pvt Co. has issued deferred shares, in the future if the company goes bankrupt, XYZ Co. will have only minimal benefits.
• This is because deferred shareholders have limited rights when compared to ordinary shareholders.
• They cannot involve in any of the company matters.
• In case of bankruptcy, deferred shareholders will be paid off only after the ordinary shareholders are cleared off.
• This is the reason why it is a void issue.