When shares are issued at a premium for the purpose of redemption of preference shares, amount of premium can be used for redemption of par value of preference shares.
When shares are issued at a premium for the purpose of redemption of preference shares, amount of premium can be used for redemption of par value of preference shares.
The correct option is B False
Redemption of preference shares means returning the preference share capital a sum equal to the nominal amount of the shares so redeemed must be transferred of the profits of the company or out of the company's security premium account. can be utilized for the issue of fully paid bonus shares to the shareholders.
As per the Companies Act, 1956, as amended in 1988, only preference shares which are redeemable within 10 years can be issued.
The preference shares may be redeemed at par or at premium. Redemption of preference shares may be carried out either out of undistributed profits otherwise available for distribution by way of dividend or from the proceeds of fresh issue of shares.
It may be noted here that the term ‘proceeds of fresh issue’ does not include share premium money if fresh issue is being made at a premium. The premium on redemption of preference shares may be adjusted against the securities premium account or the profit and loss account.
It is only fully paid preference shares which can be redeemed. Partly paid preference shares cannot be redeemed unless they are fully paid.
As per the Companies Act, 1956, as amended in 1988, only preference shares which are redeemable within 10 years can be issued.
The preference shares may be redeemed at par or at premium. Redemption of preference shares may be carried out either out of undistributed profits otherwise available for distribution by way of dividend or from the proceeds of fresh issue of shares.
It may be noted here that the term ‘proceeds of fresh issue’ does not include share premium money if fresh issue is being made at a premium. The premium on redemption of preference shares may be adjusted against the securities premium account or the profit and loss account.
It is only fully paid preference shares which can be redeemed. Partly paid preference shares cannot be redeemed unless they are fully paid.
