Redemption of preference shares

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Querist : Anonymous

Querist : Anonymous (Querist)

28 February 2013 Dear All,

Please tell me the procedure or step for Redemption of Preference shares by a private limited company.

Whether we have to file any forms to ROC.

If private limited company had issued Preference share in 1998, then when it can redeem the preference shares.

Please do the needfull ASAP

Thanks & Regards

Ajay Mishra

Ajay Mishra (Expert)
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28 February 2013 Hi

Go to the following link, it may help you:

https://www.caclubindia.com/share_files/procedure-for-redemption-of-preference-shares-17568.asp#.US8KeB2VOJw

Ajay Mishra

Ajay Mishra (Expert)
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28 February 2013 Hi

Go to the following link, it may help you:

https://www.caclubindia.com/share_files/procedure-for-redemption-of-preference-shares-17568.asp#.US8KeB2VOJw

Querist : Anonymous

Querist : Anonymous (Querist)

28 February 2013 Dear Sir,

In the given link which form to file with roc is not mention

Ajay Mishra

Ajay Mishra (Expert)
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28 February 2013 No need to file any return with ROC, unless new shares are not alloted by you.

Querist : Anonymous

Querist : Anonymous (Querist)

28 February 2013 Dear Sir,

Our private limited company have issued Preference shares in the year 1998.

Please confirm whether it is 10 years or 20 years to redeem preference shares.

if the shares are redeem then we have to change MOA the capital details or not.

Ajay Mishra

Ajay Mishra (Expert)
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28 February 2013
Period for redemption of preference shares
Section 80(5A) of the Act provides that w.e.f. 1-3-1997, a company cannot issue preference shares which is irredeemable or redeemable after the expiry period of 20 years from the date of its issue.
If a company fails to comply with the provisions of section 80A, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 10,000 for every day during which such default continues and every officer of the company in default shall be punishable for a term which may extend to 3 years and shall also be liable to fine.

Ajay Mishra

Ajay Mishra (Expert)
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28 February 2013
Requirement for redemption of shares
Section 80(1) provides conditions for redemption of preference share which has to be complied with by a company
(1) The preference shares shall be redeemed out of profits of the company which would otherwise be available for distribution as dividend or out of the proceeds of a fresh issue of shares made for the purpose of redemption.
(2) Only fully paid preference shares shall be redeemed.
(3) The premium, if any, payable on redemption shall be provided out of profits or out of the company's security premium account, before the shares are redeemed.
(4) Where any preference shares are redeemed out of profits, a sum equivalent to the nominal value of the shares redeemed shall be transferred to the capital redemption reserve fund.

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