Preference shares issued shall be redeemable within a time period not extending 20 years. Irredeemable share are not allowed in India
Issue of a Non-Convertible Preference Share must be authorized by Articles of Association of the company. If AoA do not authorize, steps must be taken to alter it
Such issuance of preference must be authorized by Special Resolution in the General meeting of the company.
Ensure that share capital as increased by the proposed issue of preference shares should be within the authorized share capital of the Company and if not, necessary steps have to be taken to increase the authorized share capital of the company.
Company issuing should also ensure that authorized share capital of the Company is divided into Equity Share Capital and Preference share Capital and if not, necessary steps have to be taken to reclassify the authorized share capital of the company accordingly
The issue of preference shares by the company is authorized by passing a special resolution in a general meeting of the company. Also, the company, at the time of issue of preference shares, must not have defaulted in the redemption of preference shares issued either before or after the commencement or in payment of dividend due on any preference shares.
A board consisting of the directors shall meet and determine the number of non-convertible preference shares to be issued.
If on rights basis:
- To hold a board meeting, draft and pass a resolution determining the number of such shares to be issued
- Share draft minutes to all board members, directors, shareholders alongwith letter offer.
- Send notice for General Meeting proposing the special resolution.
- Hold such meeting and pass the resolution wit 3/4th majority
- After passing the resolution, file a certified copy of the resolution with the Registrar.
- Dispatch letter of offer to all shareholders.
- Hold meeting of Directors to approve and allot the preference shares.
If on preferential basis:
- To pass a notice with Board meeting agenda and hold a meeting.
- Propose a resolution to be passed, alongwith letter offer.
- Share draft minutes to all board members, directors, shareholders alongwith letter offer.
- Send notice for General Meeting proposing the special resolution.
- Hold such meeting and pass the resolution wit 3/4th majority
- After passing the resolution, file a certified copy of the resolution with the Registrar.
- Dispatch letter of offer to all shareholders.
- Hold meeting of Directors to approve and allot the preference shares.
- File return of allotment of share before the Registrar
- Make entries in Register of members and Register of Directors of their share holdings.
