Redeemable preference shares into convertible preference shares

    Posted By : CS Shiriti / Published on : 26-Apr-2020 01:57 PM / View : 43 / Comment : 0
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    XYZ Private Limited issued Redeemable Preference Shares worth 50 crores to certain investors. The preference shares were redeemable after a period of 5 years. After two years of the issue, the company and the Investors reach a conclusion to convert these redeemable preference shares into convertible preference shares.

    Issues for consideration:

    a. Is it possible to change the terms of preference shares? Will such a change from ‘redeemable’ to ‘convertible’ be regarded as a ‘change in terms’?

    b. What additional formalities will be required for effecting such a change? What are corporate actions will be required for effecting the change in terms?

    c. What is the maximum period up to which preference shares can be issued? Can preference shares be issued at a premium?
    Read more on : preference shares convertible into redeemable



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