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Note: After the commencement of The Companies (Amendment) Act, 1996, a company cannot issue any preference share which is irredeemable or is redeemable after the expiry of a period of twenty years from the date of its issue.


According to Section 80-A of The Companies Act, 1956, a company which has issued preference shares before the commencement of The Companies (Amendment) Act, 1988, shall

  • Redeem such irredeemable preference shares issued by it within a period of 5 years from the date of commencement.
  • Redeem such redeemable preference shares which are issued for a period of 10 years or more, on the date on which such share is due for redemption or within a period of 10 years from the date of commencement, whichever is earlier.

Note: If the company is unable to redeem such shares and to pay dividend on such shares, then the company shall file a petition to the Company Law Board (CLB) seeking permission to issue further redeemable preference shares equal to the amount due (including the dividend thereon). On issue of such further redeemable preference shares, the unredeemed shares shall be deemed to have been redeemed.

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