Question

Consider the following statements:
Redeemable preference shares of a company can be redeemed out of
1. Profits of the company which would otherwise be available for dividend.
2. Company's share premium account.
3.Fresh issue of shares made for the purpose of redemption.
Which of the above statements are correct?

• A. 1 and 2
• B. 1 and 3
• C. 2 and 3
• D. 1, 2 and 3

Answer 1

The correct option is B 1 and 3

Redeemable preference shares of a company can be redeemed out of profits of a company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of redemption.