Question

The preference shares can be redeemed :

• A. Out of profits
• B. Out of the proceeds of fresh issue of equity shares
• C. Partly out of profits and partly out of the proceeds of fresh issue of equity share
• D. All of the above

Answer 1

The correct option is D All of the above

Redemption of preference shares means returning the preference share capital to the preference shareholders either at a fixed date or after a certain time period during the life time of the company provided company must complied certain conditions. Shares can be redeemed out of the profit of the company which would otherwise be available for the dividend; or out of the proceeds of a fresh issue of shares made for the purpose of redemption.