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Corporations Bill 2001

Part 2H.2 Redemption of redeemable preference shares

   

254J   Redemption must be in accordance with terms of issue

             (1)  A company may redeem redeemable preference shares only on the terms on which they are on issue. On redemption, the shares are cancelled.

Note:          For the power to issue redeemable preference shares see paragraph 254A(1)(b) and subsections 254A(2) and (3).

             (2)  This section does not affect the terms on which redeemable preference shares may be cancelled under a reduction of capital or a share buy-back under Part 2J.1.

254K   Other requirements about redemption

                   A company may only redeem redeemable preference shares:

                     (a)  if the shares are fully paid-up; and

                     (b)  out of profits or the proceeds of a new issue of shares made for the purpose of the redemption.

Note:          For a director’s duty to prevent insolvent trading on redeeming redeemable preference shares, see section 588G.

254L   Consequences of contravening section 254J or 254K

             (1)  If a company redeems shares in contravention of section 254J or 254K:

                     (a)  the contravention does not affect the validity of the redemption or of any contract or transaction connected with it; and

                     (b)  the company is not guilty of an offence.

             (2)  Any person who is involved in a company’s contravention of section 254J or 254K contravenes this subsection.

Note 1:       Subsection (2) is a civil penalty provision (see section 1317E).

Note 2:       Section 79 defines involved .

             (3)  A person commits an offence if they are involved in a company’s contravention of section 254J or 254K and the involvement is dishonest.



 

Chapter 2H Shares