law: Companies Act, 2013 
  55.
  
    Issue
  
  and redemption of preference shares.
  1.      No company limited by
  
  shares shall, after the commencement of this Act, issue any preference shares
  
  which are irredeemable.
  2.      A company limited by
  
  shares may, if so authorised by its articles, issue preference shares which are
  
  liable to be redeemed within a period not exceeding twenty years from the date
  
  of their issue subject to such conditions as may be prescribed: shares.
  Provided
  
  that a company may issue preference shares for a period exceeding twenty years
  
  for infrastructure projects, subject to the redemption of such percentage of
  
  shares as may be prescribed on an annual basis at the option of such
  
  preferential shareholders:
  Provided
  
  further that—
  a.      no such shares shall
  
  be redeemed except out of the 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 such redemption;
  b.     no such shares shall
  
  be redeemed unless they are fully paid;
  c.      where such shares are
  
  proposed to be redeemed out of the profits of the company, there shall, out of
  
  such profits, be transferred, a sum equal to the nominal amount of the shares
  
  to be redeemed, to a reserve, to be called the Capital Redemption Reserve Account,
  
  and the provisions of this Act relating to reduction of 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; and
  d.    
               
  
   i.        
  
    in
  
  case of such class of companies, as may be prescribed and whose financial
  
  statement comply with the accounting standards prescribed for such class of
  
  companies under section 133, the premium, if any, payable on redemption shall
  
  be provided for out of the profits of the company, before the shares are
  
  redeemed:
  Provided
  
  also that premium, if any, payable on redemption of any preference shares
  
  issued on or before the commencement of this Act by any such company shall be
  
  provided for out of the profits of the company or out of the company’s
  
  securities premium account, before such shares are redeemed.
              
  
   ii.        
  
    in
  
  a case not falling under sub-clause (i ) above, the premium, if any,
  
  payable on redemption shall be provided for out of the profits of the company
  
  or out of the company’s securities premium account, before such shares are
  
  redeemed.
  1.     
  2.     
  3.      Where a company is
  
  not in a position to redeem any preference shares or to pay dividend, if any,
  
  on such shares in accordance with the terms of issue (such shares hereinafter
  
  referred to as unredeemed preference shares), it may, with the consent of the
  
  holders of three-fourths in value of such preference shares and with the
  
  approval of the Tribunal on a petition made by it in this behalf, issue further
  
  redeemable preference shares equal to the amount due, including the dividend
  
  thereon, in respect of the unredeemed preference shares, and on the issue of
  
  such further redeemable preference shares, the unredeemed preference shares
  
  shall be deemed to have been redeemed:
  Provided
  
  that the Tribunal shall, while giving approval under this sub-section, order
  
  the redemption forthwith of preference shares held by such persons who have not
  
  consented to the issue of further redeemable preference shares.
  Explanation.— For the removal of
  
  doubts, it is hereby declared that the issue of further redeemable preference
  
  shares or the redemption of preference shares under this section shall not be
  
  deemed to be an increase or, as the case may be, a reduction, in the share
  
  capital of the company.
  4.      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.
  Explanation. —For the purposes of
  
  sub-section (2 ), the term ‘‘infrastructure projects’’ means the
  
  infrastructure projects specified in Schedule VI.