27 March 2010
Please explain Section 80A regarding the issue and redemption of irredeemable preference shares?
Also explain the period allowed for its redemption, if such shares exist before the date of amendment made on 15-06-1988 and after the date of amendment.
27 March 2010
1) All redeemable pref shares existing as on 15-6-1888 are to be redeemed within 10 years of commencement of sec 80A i.e by 14-6-1998 or within the period fixed for redemption which ever is earlier; 2) in case pref shares are to be redeemed by issue of further redeemable pref shares ,the new pref shares issued on or after 1-3-1997 are redeemable within a period of 20 years u/s80(5A)
The said section provides that notwithstanding anything contained in the terms of issue any preference shares, every preference share issued before the commencement of the Companies (Amendment) Act, 1988:
which is irredeemable should be redeemed within a period not exceeding 5years from such commencement.
Please explain when to consider 5years and when to consider 10years for redemption of irredeemable pref. shares.
CAclubindia
