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of <h1>Rules on redeemable preference shares under Section 55: issue conditions, redemption sources, capital redemption reserve requirements</h1> Companies limited by shares cannot issue irredeemable preference shares. They may issue redeemable preference shares if authorized by their articles, generally redeemable within 20 years, except for longer periods in infrastructure projects subject to prescribed annual redemptions at shareholders' option. Redemption must be from distributable profits or proceeds of a fresh issue and only for fully paid shares. When redeemed from profits, an equivalent amount must be transferred to a Capital Redemption Reserve, treated as paid-up capital, which may later be used for fully paid bonus shares. Specific rules govern provision of redemption premium. Companies unable to redeem may, with prescribed consents and Tribunal approval, issue further redeemable preference shares without altering share capital.
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