Question

what do you mean by redemption of preference share?what is statutory requirement for such redemption?
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Answer 1

Explanation:

Redemption of Preference Shares means the repayment to the shareholders of preference share capital. A company may redeem its preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders and the preference shares may be redeemed.

Answer 2

It refers to the return of capital to preference shareholders.

• During the life of the company, the preference share capital may be returned to the preference shareholders at a defined date or after a certain amount of time, providing that the company meets certain conditions.
• The requirements are -

1. They need to be fully paid up.
2. In case of a partly paid up share it needs to be converted to fully paid.
3. They can only be redeemed from the company's profits which are else kept for dividends.