Premium on Redemption of preference share

The premium is generally over the face value of the preference shares and is not required to be calculated pro rata.

However, If i have not understood your query properly, you may elaborate.

Thanks Rasesh, but Actually i want to ask when will the liability of company arise to pay premium on redemption of preference share.....when the subscripttttion amt recd. or when company allot the preference shares?

Dear Jyotsna,

Kindly appreciate in case of redemption of preference shares liability of the company arises simply on redemption of preference shares.

This payment of premium on redemption has nothing to do with the date on which subscripttion amount received or when company allots preference shares.

Redemption is a current event whereas allotment and receipt of subscripttion money are past events.

Regards

Ankurji Thanks! Could u pls tell me where it is written in Companies Act?

Can any one tell me what companies act says in regard to the Redeemption of Preference Shares and the treatment of its Premium on redeemption except Section 80 of the Companies Act?

No where written in law.

According to my simple thinking (which I think not gonna help you) premium on redemption is --- allot shares at par and bring money and later on redeem with premium according to terms of issue. It is a simple promise to preference shareholder --- initially you pay us Rs. 10 for one preference share and at the time of redemption we’ll return your money with 20% premium i.e. we’ll pay you Rs. 12 for one preference share at the time of redemption.

A company paid premium on redemption of preference share and this preimum agreed by issusing company as agreement made for investment in preference share company . This preimum is besides the dividend paid by company and preimum amount reduce by theamount  paid as dividend amount , Can this preimum is treated a deemed dividend or any other nature of expenditure reason being that  the company pledged some securities in favour of investor. 

A company paid premium on redemption of preference share and this preimum agreed by issusing company as agreement made for investment in preference share company . This preimum is besides the dividend paid by company and preimum amount reduce by theamount  paid as dividend amount , Can this preimum is treated a deemed dividend or any other nature of expenditure reason being that  the company pledged some securities in favour of investor. 

If a company issues preference shares on premium and redeemed the same on premium, what are the rules and provision related to the same?

refer sec 55 of companies act,2013

1. should be redeemed within 20 years frm the date of issue  except for infrastrucure project subject to compliance witrh specified conditions.

compliance actions:

check aoa

BR for issue of pref.shares

SR for issue of pref. shares

file MGT-14 fr the same alongwith explanatory statement(wihin 30 days of passing resolution)

PAS-3 with list of allottees,valuation report,BR.SR(within 30 days of allotment)

MGT-1 for entry in register of members(within 7 days of allotment)

issue share certificate

stamp duty as payable as per act

REDEMPTION:

AOA shouls authorise 

BR toa uthorise redemption out of profits or proceeds of fresh issue of shares for this purpose

SH-7 for notice to registrar for alteration of share capital + BR

MGT-1 for entry in register of members