Redemption of Pref Capital

877 views 3 replies

Section 80 says that preference shares can be redeemed out of the profits otherwise available for the dividend.  In general, dividend can be paid out of current year profit.  Dividend can also be paid out of past profit but subject to certain conditions.

My questions :

1.Can we redeem Preference Shares out of Past Profits.

2. Whether entire accumulated profits qualified for redemption or the amount remaining after the conditions stiplutated for dividend is available for redemption.

Pl. see and reply.

Thanks

Saurabh Mittal

 

Replies (3)

HI

The co. can redeem its Pref shares out of profits(inculding past yrs) and the amt of free reserves i.e. the amt that can be used to distribute profits can be used for redemption.

The main concept is to redeem out of funds available for distribution of dividents.

 

Originally posted by :Saurabh Mittal
" Section 80 says that preference shares can be redeemed out of the profits otherwise available for the dividend.  In general, dividend can be paid out of current year profit.  Dividend can also be paid out of past profit but subject to certain conditions.
My questions :
1.Can we redeem Preference Shares out of Past Profits.
2. Whether entire accumulated profits qualified for redemption or the amount remaining after the conditions stiplutated for dividend is available for redemption.
Pl. see and reply.
Thanks
Saurabh Mittal
 
"


 

But the entire past profits (including reserves) are not available for distribution as dividend.  There are certain conditions attached for payment of dividend out of past profits.  So, are these conditions applicable on redemption of pref shares also ?

Nope the conditions of past profits being distributed as dividend does not apply. Those conditions only apply solely for distributions of dividends only.

However, amount utilised for redemption of  preference shares less if any proceeds of issue from equity shares utilitised for redemption should be tranferred to capital redemption reserve.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
20 June 2026
Assistant Accounts Manager

Fintax Professionals

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 08 June 2026
Internal & Taxation Article

O P Bagla & Co LLP

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 28 June 2026
Article Assistant

Sharma Chetan And Company

Gurgaon

CA Inter

View Details
Company
20 June 2026
Chartered Accountant

ANV & Company

New Delhi

CA

View Details
Company
09 June 2026
Accounts Associate

S Madan and CO

New Delhi

Graduate (Any)

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
24 June 2026
Chartered Accountant

CA Darshita Shah & Co

Nadiad

CA

View Details
Company
ARTICLESHIP 30 June 2026
Article Assistant or Paid Assistant

VIKAS VERMA & CO

New Delhi

Others

View Details