State and briefly discuss the conditions which must be fulfilled before a company can either issue or redeem shares which are stated to be redeemable

State and briefly discuss the conditions which must be fulfilled before a company can either issue or redeem shares which are stated to be redeemable

ANSWER
A company may issue redeemable preference shares pursuant to the following conditions:
• The issue must be authorized the articles.
• The company‟s capital must be dividend into different classes of shares.
• The issue must be disclosed in the company‟s prospectus or statement in lieu.
• The registrar must be notified of the issue.

A company may redeem any redeemable preference shares pursuant to the following conditions:
• The redemption must be authorized the articles.
• The shares must be fully paid.
• The share must be redeemed profit or proceeds of a special issue for that purpose.
• Any premium payable must be provided out of the profit of the company or the share premium account.
• If the shares are redeemed otherwise than out of the proceeds of a special issue, the capital redemption reserve fund must be created.
• The registrar must be notified of the redemption within 30 days thereof.