ACCA Applied Skills · Corporate and Business Law (Global) · Share capital
Zentra Ltd, a private company, has issued redeemable shares. Its articles authorise redemption. Which statement best describes the rule on when shares may be issued as redeemable?
A company may issue redeemable shares if its articles allow, provided it retains at least one issued share that is not redeemable. This ensures the company never has only redeemable shares, which could leave no continuing members after redemption.
- ARedeemable shares may be issued only if the company has at least one issued share that is not redeemableCorrect
- BRedeemable shares may be issued only by public companies
- CRedeemable shares may be issued only if redemption is funded entirely from a new share issue
- DRedeemable shares may be issued only if all shareholders approve unanimously in writing
Explanation
A company may issue redeemable shares only if the articles permit, and it must not end up with only redeemable shares in issue. Option B is wrong because private companies may also issue them. Funding sources and unanimity are not conditions for issuing.
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