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CS Executive · Corporate Accounting and Financial Management · Related Aspects of Company Accounts

Meera Ltd cannot redeem its preference shares on the due date. Under the Companies Act, 2013, which course is available?

The company may issue further redeemable preference shares equal to the amount due, including dividend, with consent of holders of three-fourths in value of the unredeemed shares and Tribunal approval. The old shares are then deemed redeemed, and the Tribunal can order redemption for non-consenting holders.

  1. AIssue further redeemable preference shares equal to the amount due, with consent of holders of three-fourths in value and Tribunal approvalCorrect
  2. BIssue further redeemable preference shares with a simple majority resolution of equity shareholders only
  3. CConvert them to irredeemable preference shares with Board approval
  4. DRedeem them from the Capital Redemption Reserve directly

Explanation

The Act allows a company unable to redeem to issue further redeemable preference shares equal to the amount due including dividend, with consent of three-fourths in value of holders and Tribunal approval. The unredeemed shares are then deemed redeemed. Irredeemable preference shares cannot be issued.

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