Preference shares

[P C Joshi]

Dear Friends,

Here is a query relating to pref. shares .

A Ltd issued redeemable preference share of Rs 100 lacs in 1977, the redemption of of pref. shares was due in 1983. The company had huge looses as such the remeption could not happen. In a joint meeting of equity and preference shareholders of the company, the redemption was extended till 1986. But the company contunue to make losses and became sick. Now another companywants totake over the said company.

pls let me know your views on the following queries.

1. What is the consequences of not redeeming the pref. shares by the company within the stipulated period

2. What are the penalties and whether they are compoundable

3. What is the liability of purchasing company  w.r.t. pref. shares/unpaid dividend and non compliances by old company.

 

Thanks & Regards

P.C. Joshi
B.Com, ACS, LLB
Mobile- 09891702927

[Saurabh Arora]

Penalty under section 80A of the Act:

 

 

If a company fails to comply with the provisions of section 80A, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 10,000 for every day during which such default continues and every officer of the company in default shall be punishable for a term which may extend to 3 years and shall also be liable to fine.