Conversion of redeemable preference share in to equity share

Dear All,

Our Company has issued "REDEEMABLE PREFERENCE SHARES" to one share holder.

 

But the Company is not in position to redeem the same redeemable shares under the permissible provisions of Companies Act; I.e. 

 

(a). Either out of profits of the Company ( The company is making loss)

 

or (b). out of the proceeds of fresh issue for redemption purpose ( which is not possible in our case)

 

So there is no way out for redemption of preference share under Companies Act and it will also be violation if we don't redeem as Company can not keep irredeemable shares and it has to be redeemed.

 

Because of  above stated fact, it's now intended to convert either into convertible preference share or in to Equity shares provided permitted under Companies Act and without any violation.

 

Since we are not able find out any specific provision either in the Act or otherwise may be not in position to interpret the provisions permitting such conversions if any, of redeemable preference share into Equity Shares, I would request you to give your valuable suggestions if such conversion can be permitted or not.

 

Please suggest is it possible to convert the redeemable Preference Share into Equity shares/convertible preference shares. If yes, then under which section/provision of Companies Act. What is the procedure.

 

Since the matter is very urgent, your quick valuable input will be highly appreciated.

 

Thanks In Advance

Lalit Mohanty