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redemption of Preference shares convertible into equity

This query is : Resolved 
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(Querist)
31 March 2008 Dear ALl,
I have an important query .

If we redeem a compulsorily convertible preference shares (in to equity) ,.because of mututal adjustment with the Prefernce shareholder is it contravantion of companies Act..(the issuing company is pure private limited company)..

Responses are solicited urgently....
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Kinjal Shah

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Kinjal Shah (Expert)
02 April 2008 Mr.Vikas,

Dont you think this will be consider as arrangement under Section 391-394 of the Companies Act?

According to me the Company can do this but Under Section 391-394 of the Companies Act,1956 (if want to comply strictly with the provisions of the Companies Act) otherwise obtain consent from all the sahreholders (i.e. equity and preference shares) and alos obtain consent from the creditors if the Company dont want go Company Court (it will not be full compliance of the provision).
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