Question

As Per the Companies Act, only preference shares, which are redeemable within ____________.

• A. 24 years
• B. 22 years
• C. 30 years
• D. 20 years

Answer 1

The correct option is D 20 years

The preference shares are issued along with the equity shares. There are four types of preference shares:

Redeemable/Non-Redeemable preference shares

Participating/Non-Participating preference shares

Cumulative/Non-Cumulative preference shares

Convertible/Non-Convertible preference shares

As per the section under the companies act, the redeemable preference shares can be redeemed after 20 years of issue of such shares. Once 20 years are completed theses preference shares cannot be redeemed back to the shareholders, Moreover, only redeemedable preference shares are considered while doing any redemption procedure.