Dear Professionals
Need your views on this.
A, a pvt ltd company have issued redeemable preference shares of Rs. 100 each (issued at par). A have reserves equivalent to 70% of redemption amount and willing to redeem the shares at discount i.e at 30% discount. The preference shareholder have also agreed to accept as full and final settlement.
my query is can A redeem preference shares at discount? If yes how this can be done?
regards
Malav
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redemption of Preference Shares
Replies (4)
The redemption terms and conditions will done accordance to the terms and conditions of the share application form through whch the pref shares are raised. If you want to change the terms and condition, you can pass the same in an EGM stating that the same will be redeemend with 30% discount. The terms of discount and change should be passed in the EGM as special resolution.
Once the resolution is passed as Special, you have to file Form 23 for registering the resolution.
Once the terms are finalised in the EGM with 3/4th of majority, you can redeem the prefeence shares at a discount.
This is my view, kindly rectify if I am wrong :)
Regards
CS Jithesh
As per Section 80, Preference can be redeemed as per Articles of the Company and terms of redeemption if any. Thus check if articles so provide and get the approval of Prefernce share holder for redeemption of shares at discount.
Jagruti is right, approval in class meeting is also required.
Dear Experts
What are the Income Tax implications on the above redemption?
Thanks in Advance
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