80. Power to issue
redeemable preference shares.—(1) Subject to
the provisions of this section, a company limited by shares
may, if so authorised by its articles, issue preference shares
which are, or at the option of the company are to be liable,
to be redeemed:
Provided that—
(a) no such shares shall be redeemed except out of profits
of the company which would otherwise be available for dividend
or out of the proceeds of a fresh issue of shares made for
the purposes of the redemption;
(b) no such shares shall be redeemed unless they are fully
paid;
(c) the premium, if any payable on redemption shall have
been provided for out of the profits of the company or out
of the company’s security premium account , before the
shares are redeemed;
(d) where any such shares are redeemed otherwise than out
of the proceeds of a fresh issue, there shall, out of profits
which would otherwise have been available for dividend, be
transferred to a reserve fund, to be called the capital redemption
reserve account, a sum equal to the nominal amount of the
shares redeemed; and the provisions of this Act relating to
the reduction of the share capital of a company shall, except
as provided in this section, apply as if the capital redemption
reserve account were paid-up share capital of the company.
(2) Subject to the provisions of this section, the redemption
of preference shares thereunder may be effected on such terms
and in such manner as may be provided by the articles of the
company.
(3) The redemption of preference shares under this section
by a company shall not be taken as reducing the amount of
its authorised share capital.
(4) Where in pursuance of this section, a company has redeemed
or is about to redeem any preference shares, it shall have
power to issue shares up to the nominal amount of the shares
redeemed or to be redeemed as if those shares had never been
issued; and accordingly the share capital of the company shall
not, for the purpose of calculating the fees payable under
section 611, be deemed to be increased by the issue of shares
in pursuance of this sub-section:
Provided that, where new shares are issued before the redemption
of the old shares, the new shares shall not, so far as relates
to stamp duty, be deemed to have been issued in pursuance
of this sub-section unless the old shares are redeemed within
one months after the issue of the new shares.
(5) The capital redemption reserve account may, notwithstanding
anything in this section, be applied by the company, in paying
up unissued shares of the company to be issued to members
of the company as fully paid bonus shares.
(5A) Notwithstanding anything contained in this Act, no company
limited by shares shall, after the commencement of the Companies
(Amendment) Act, 1996, issue any preference share which is
irredeemable or is redeemable after the expiry of a period
of twenty years from the date of its issue.
(6) If a company fails to comply with the provisions of this
section, the company, and every officer of the company who
is in default, shall be punishable with fine which may extend
to ten thousand rupees.
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