{"id":48248,"date":"2024-04-15T22:38:29","date_gmt":"2024-04-15T22:38:29","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=48248"},"modified":"2024-04-15T22:38:29","modified_gmt":"2024-04-15T22:38:29","slug":"as-per-section-55-of-companies-act-2013-the-redemption-of-preference-shares-can-be-made","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/as-per-section-55-of-companies-act-2013-the-redemption-of-preference-shares-can-be-made\/","title":{"rendered":"As per section 55 of Companies Act 2013, the redemption of preference shares can be made:"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Out of profits available for dividend&#8221; option2=&#8221;From the issue of new shares&#8221; option3=&#8221;Partially from available profits and partially from issue of new shares&#8221; option4=&#8221;All are correct&#8221; correct=&#8221;option4&#8243;]<!--more--><\/p>\n<p>The correct answer is D. All are correct.<\/p>\n<p>Section 55 of the Companies Act 2013 states that a company may redeem any of its preference shares at any time after the expiry of five years from the date of its issue, subject to the following conditions:<\/p>\n<ul>\n<li>The redemption must be out of profits available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of redemption.<\/li>\n<li>The redemption must be approved by a special resolution passed by the company at a general meeting.<\/li>\n<li>The redemption must be announced to the shareholders at least 30 days before the date of redemption.<\/li>\n<\/ul>\n<p>The Act does not specify how the redemption of preference shares should be funded. However, the three options listed in the question are all possible methods of funding redemption.<\/p>\n<p>Option A: Redemption out of profits available for dividend<\/p>\n<p>This is the most common method of funding redemption. The company can use its profits available for dividend to pay off the preference shareholders.<\/p>\n<p>Option B: Redemption from the issue of new shares<\/p>\n<p>The company can issue new shares and use the proceeds from the issue to pay off the preference shareholders.<\/p>\n<p>Option C: Redemption partially from available profits and partially from issue of new shares<\/p>\n<p>The company can use a combination of profits available for dividend and the proceeds from the issue of new shares to pay off the preference shareholders.<\/p>\n<p>The method of funding redemption that is chosen will depend on the financial position of the company and the terms of the preference shares.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Out of profits available for dividend&#8221; option2=&#8221;From the issue of new shares&#8221; option3=&#8221;Partially from available profits and partially from issue of new shares&#8221; option4=&#8221;All are correct&#8221; correct=&#8221;option4&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-48248","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>As per section 55 of Companies Act 2013, the redemption of preference shares can be made:<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/as-per-section-55-of-companies-act-2013-the-redemption-of-preference-shares-can-be-made\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"As per section 55 of Companies Act 2013, the redemption of preference shares can be made:\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Out of profits available for dividend&#8221; 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