law: Companies Act, 1956
  Sec 80    -     Power
  
  to issue redeemable preference shares 
  (1) Subject to the provisions of this section,
  
  a company limited by shares may, if so authorized by its articles, issue
  
  preference shares which are, or at the option of the company are to be liable,
  
  to be redeemed :
  Provided  that- 
  (a) 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 ;
  (b) no such shares
  
  shall be redeemed unless they are fully paid ;
  (c) the premium, if any, payable on redemption
  
  shall have been provided for out of the profits of the company or out of the
  
  company's security premium account, before the shares are redeemed ;
  (d) 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 account, a sum
  
  equal to the nominal amount of the shares redeemed ; 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 account
  
  were paid-up share capital of the company.
  (2) 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 company.
  (3) The redemption of preference shares under
  
  this section by a company shall not be taken as reducing the amount of its
  
  authorized share capital.
  (4) Wherein 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 purpose of calculating the fees
  
  payable under section 611, be deemed to be increased by the issue of shares in
  
  pursuance of this sub-section :
  Provided  that, where new shares are issued
  
  before the redemption 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
  
  sub-section unless the old shares are redeemed within one month after the issue
  
  of the new shares.
  (5) The capital redemption reserve account
  
  may, notwithstanding anything in this section, be applied by the company, in
  
  paying up unissued shares of the company to be issued to members of the company
  
  as fully paid bonus shares.
  (5A) Notwithstanding anything contained in
  
  this Act, no company limited by shares shall, after the commencement of the Companies
  
  (Amendment) Act, 1996 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.
  (6) If a company fails to comply with the
  
  provisions of this section, the company, and every officer of the company who
  
  is in default, shall be punishable with fine which may extend to ten thousand
  
  rupees.