Redemption of Preference Shares

This query is : Resolved

Ashish Gaggar (Querist)
Follow

03 February 2011 Dear Friends
I have certain queries related to Redemption of 5% Redeemable Cumulative Preference Shares.
The Back Ground is as follows
1) The Company has in Year 2003 issued 5% Cumulative Redeemable Preference Shares.
2) The Company has not declared any Dividend for both Equity Shares and Preference Shares.
3) The Company has not made any Provision in its accounts for Dividend to be paid to preference shares.
My Query
The Company now wants to redeem these Preference Shares.
1) Is the Company required to pay the accumulated dividend( for 7 years) on these cumulative preference shares at the time of redemption?
2) If it is mandatory to pay the accumulated dividend, can the company obtain a waiver letter from these preference share holders to get the dividend waived.

Kindly note that the following
1) The Company has not made any provisions for the accumulated dividend
2) Nor the Company has paid any dividend to the Equity Share holders during this period.

Regards
Ashish Gaggar

Kinjal Shah

Kinjal Shah (Expert)
Follow

04 February 2011 It is mandatory for the Company to pay accumulated dividend amount at the time of redemption of pref shares.

Hold the meeting of pref shares for change in the terms and conditions of issue of pref shares.