(d) (i) in case of such class of companies, as may be prescribed and whose  comply with the  prescribed for such class of companies under section 133, the premium, if any, payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed: Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed. Terms of issue like term, dividend rate etc. 1.

the purposes of sub-section (2), the term ‘‘infrastructure projects’’. in value of such preference shares and with the approval of the Tribunal on a, petition The Articles of Association must, however, authorise the company to do so. (6) A company may redeem its preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders under section 48 of the Act and the preference shares may be redeemed:—. What are the modes of allocation of preference shares? There are various Types of Preference Shares with differences in their structure. Is it mandatory to provide interest to Preference Shareholders..???. (7) Petroleum and natural gas, including the following:—. cumulative or non – cumulative, participating or non – participating , convertible or non – convertible. Registrationseva.com can help in all kind of Registration in a very less time and at affordable price. PROCESS FOR REDEMPTION OF PREFERENCE SHARES: (Author –Divesh Goyal is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Explanation.—For the purposes of sub-section (2), the term “infrastructure projects” means the infrastructure projects specified in Schedule VI. (i) in case of such class of companies, as may be prescribed and whose, financial shares, and

Please note that if the preference shares are issued to person other than existing shareholders of the Company or employees of the Company i.e. (3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the. 9. (2) A company limited by shares may, if so authorised by its articles, issue preferenceshares which are liable to be redeemed within a period not exceeding twenty years from the

method of valuation etc. Refer rule 9 of the Companies (Share Capital and Debentures) Rules, 2014. (2) A company issuing preference shares shall set out in the resolution, particulars in respect of the following matters relating to such shares, namely:—. Preference Share with reference to any Company limited by shares means that part of the issued share capital which carries or would carry preferential right with respect to:-. File SH-7 with Registrar within 30 days of passing of Resolution. The differences between the two shares can be determined under the following characteristics. The preference shares are commonly termed as “quasi-debt” reason being they provide the shareholder a preferential right of receiving fixed and first dividend along with caring a risk of being insecure equity. There are certain conditions which a company needs to comply with to have the leverage to offer these shares to its shareholders, Once the conditions are met an explanatory statement is issued that mentions details about the issuance of the preference shares as mentioned, The SOP for issuing a preference share has been shared in the Companies Act 2013, Section 62. 10. Companies (Share Capital and Debentures) Rules, 2014, Rule 9. Company limited by shares can’t issue any preference shares which are irredeemable. may As per Companies Act 2013 what is the maximum time frame within which preference shares are to be redeemed? of Preference Shares, Nominal Value of the Shares. A Company may redeem its preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders under section 48 of the Act and the preference shares may be redeemed:- Redemption, Reserve (v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv): Provided that the financial statement, with respect to one person company, small company, dormant company private company (if such private company is a start-up)may  not include the cash flow statement; Explanation. Amended vide National Company Law Tribunal (Amendment) Rules, 2016 notification dated 20.12.2016, 2016. Fully paid-up preference shares can only be redeemed. Your email address will not be published. Pass Special Resolution in the General Meeting and the Resolution shall contain the following information:-. No spam. C. Explanation.—For the removal of doubts, it is hereby declared that the issue of further redeemable preference shares or the redemption of preference shares under this section shall not be deemed to be an increase or, as the case may be, a reduction, in the share capital of the company. (c) manufacturing of components and materials or any other utilities or facilities required by the infrastructure sector like energy saving devices and metering devices; (g) emergency services (including medical, police, fire and rescue).

(10) such other facility service as may be prescribed. The categories are based upon voting rights, dividend distribution policies, reason for issue, and term of investment. ISSUE AND REDEMPTION OF PREFERENCE SHARES, [Effective from 1st April, 2014, except sub- section (3) which is effective from 1st June, 2016]. preference shares into redeemable preference shares, preference share into non-convertible debentures falls under the ambit of scheme of arrangement i.e. Explanation.—For However if a Company could not redeem its preference share with-in this time period due to unavoidable reasons then it may pass Special Resolution with 3/4th Majority and file petition to the NCLT and on the order of NCLT may issue preference shares of same kind with similar rate of dividend for some time period instead of redemption of existing one. Any time at the option of the Shareholders. According to the Companies Act, 2013, preference shares issued by a company must be redeemed within the maximum period (normally 20 years) allowed under the Act. Nature of the shares i.e.

(2) A company limited by shares may, if so authorised by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such conditions as may be prescribed: Provided that a company may issue preference shares for a period exceeding twenty years for infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preferential shareholders: (a) no such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of such redemption; (b) no such shares shall be redeemed unless they are fully paid; (c) where such shares are proposed to be redeemed out of the profits of the company, there shall, out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the Capital Redemption Reserve Account were paid-up share capital of the company; and.