Question

A company cannot issue any preference share which is redeemable after the expiry of a period of ________.

• A. 5 years
• B. 10 years
• C. 15 years
• D. 20 years

Answer 1

The correct option is D 20 years

Companies which issue preference shares is liable to pay back the capital to the shareholders after a period of $20years$ as per the companies act 2013. The 20-year span enough for any company to use any kind of security and the shareholders prefers their investment to be returned along with interest within a short span. Thus, the company cannot issue those preference shares which are to be returned after long time.

Thus, a company cannot issue the preference shares which are redeemed after a period of $20years$.