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Life of preference shares

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(Querist)
22 January 2015 For how many years can company issue preference shares, ie life of preference shares before redemption 10 years or 20 years ?
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CA Anjana Grover

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CA Anjana Grover (Expert)
22 January 2015
As per section 55 of the Act, a company can issue only redeemable preference shares i.e. a company is not allowed to issue irredeemable preference shares.

It is mandatory for every company issuing preference shares to redeem it within a period of 20 years from the date of issue.

A company may issue preference shares for a period exceeding 20 (Twenty) years for infrastructure projects. Subject to Redemption of a Minimum 10% of such preference shares per year from the 21 (twenty first) year onward or earlier, on proportionate basis, at the option of preference share holder. (As per rule- 10 of The Companies (Share Capital and Debentures) Rules, 2014.
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