Multiple choice

Section 80 of The Companies Act lays down the following conditions for the redemption of preference shares:

  1. Preference Shares must be fully paid.
  2. Redeemable preference shares can be redeemed only out of divisible profits.
  3. Premium on Redemption of shares be written off through profits or/and Securities Premium of the Company.
  4. The amount of Securities Premium cannot be utilized for the payment of the nominal value of shares. Which of the above conditions is incorrect?

  1. Only 1

  2. Only 2

  3. Only 3

  4. Only 4
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Redeemable preference shares can be redeemed only out of divisible profits or/and out of the proceeds of fresh issue of shares.

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