Remedies available for Preference shareholders in relation to redemption of preference shares

Last updated: 06 July 2022

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Quick Summary

Preference shareholders are not left without recourse if a company fails to redeem their shares or pay dividends. The NCLAT ruled that preference shareholders have the right to file applications for redemption. They can do this either under Section 55(3) of the Companies Act, 2013, by petitioning the Tribunal, or alternatively, as a class action suit under Section 245 if they believe the company's conduct is prejudicial to their interests. The Tribunal can then use its inherent powers to grant appropriate relief.

Court :
NCLAT

Brief :
The present Appeal has been filed by the Appellant w.r.t the NCLT, Chennai Bench (Tribunal) order who has dismissed the application of Appellant solely on the ground that the Appellant being preferential shareholders has no locus standi to file application for redemption of shares under Section 55(3) of the Companies Act, 2013 or even under Section 245 of the Companies Act, 2013.

Citation :
Bank of Baroda (Appellant) vs. Aban Offshore Limited (Respondent) NCLAT Company Appeal (AT) No. 35 of 2019 Dated:29/01/2020

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