COMPANIES ACT, 1929

591
[ssue of Redeemable Preference Shares and Shares at Discount.

46.—(1) Subject to the provisions of this section, a company
limited by shares may, if so authorised by its articles, issue preference
shares which are, or at the option of the company are to be liable,
to be redeemed:

Provided that—

fa) no such shares shall be redeemed except out of profits
of the company which would otherwise be available for
dividend or out of the proceeds of a fresh issue of shares
made for the purposes of the redemption;
no such shares shall be redeemed unless they are fully
paid;
where any such shares are redeemed otherwise than
out of the proceeds of a fresh issue, there shall out of
profits which would otherwise have been available for
dividend be transferred to a reserve fund, to be called
“the capital redemption reserve fund,” a sum equal
to the amount applied in redeeming the shares, and the
provisions of this Act relating to the reduction of the
share capital of a company shall, except as provided in
this section, apply as if the capital redemption reserve
fund were paid-up share capital of the company;
where any such shares are redeemed out of the proceeds
of a fresh issue, the premium, if any, payable on redemp-
tion, must have been provided for out of the profits of
the company before the shares are redeemed.

(2) There shall be included in every balance sheet of a company
which has issued redeemable preference shares a statement specifying
what part of the issued capital of the company consists of such
shares and the date on or before which those shares are, or are to
be liable, to be redeemed.

if a company fails to comply with the provisions of this sub-
section, the company and every officer of the company who is in
default shall be liable to a fine not exceeding one hundred pounds.

(3) Subject to the provisions of this section, the redemption
of preference shares thereunder may be effected on such terms
and in such manner as may be provided by the articles of the com:
pany.

2)

Power to issue
redeemable pre-
ference shares.

(4) Where in pursuance of this section a company has redeemed
or is about to redeem any preference shares, it shall have power to
issue shares up to the nominal amount of the shares redeemed
or to be redeemed as if those shares had never been issued, and
accordingly the share capital of the company shall not for the
purposes of any enactments relating to stamp duty be deemed
to be increased by the issue of shares in pursuance of this subsection:

Provided that, where new shares are issued before the redemp-
tion of the old shares, the new shares shall not, so far as relates to
stamp duty, be deemed to have been issued in pursuance of this
subsection unless the old shares are redeemed within one month
after the issue of the new shares.