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ACCA Applied Skills · Corporate and Business Law (Global) · Share capital

Which of the following is a feature of redeemable shares?

Redeemable shares are shares that the company will or may buy back at a future date, on terms fixed when they are issued. They are not defined by voting or dividend rights, nor by any need to increase authorised capital before issue.

  1. AThey are shares that will or may be bought back by the company at a future date, on terms set when they are issuedCorrect
  2. BThey are shares that give the holder the right to vote on all matters but no right to dividends
  3. CThey are shares that the company may only issue after its authorised capital has been increased

Explanation

Redeemable shares are issued on terms that the company will, or may at its or the holder's option, redeem them at a later date. The other options describe unrelated features: voting rights without dividends is a type of class right, and authorised capital increases concern the limit on issuing, not redemption.

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