Preference shares can be useful financing instruments, but Section 55 makes one point clear: irredeemable preference shares are not permitted after commencement of the Act.
Section 55 states that no company limited by shares shall issue any preference shares which are irredeemable. A company may issue preference shares liable to be redeemed within the statutory period and conditions.
| Item | Control |
|---|---|
| Articles authorisation | Check whether preference share issue is permitted. |
| Terms of issue | Dividend, redemption period, conversion and rights. |
| Valuation/pricing support | Important for investor and accounting review. |
| Allotment filing | PAS-3, register and certificate update. |
| Redemption planning | Track source of redemption and due date. |
This article is intentionally source-limited to official India Code / MCA material. Verify final filing positions with the latest Act, Rules, MCA forms and portal advisories before publishing.
Section 55 states that no company limited by shares shall issue irredeemable preference shares.
Yes. Preference shares are redeemable instruments and redemption planning is critical.
Yes. Preference shareholders and redemption records should be reflected in statutory registers.