(1) To issue preference shares the Article of Association (AOA) of the company should authorize it, if not then the amendment must be made in the Article of Association (AOA) of the company. The company must ensure that there is no default in the redemption of preference shares earlier or payment of dividend to the shareholders of the company.
(2) The company shall ensure that the resolution to issue preference shares contains all the relevant particulars.
(3) The company shall issue the notice of general meeting along with the explanatory statement, to provide the required details. In the case of a listed entity, Company shall notify the stock exchange at least 2 working days in advance of the date of the board meeting.
(4) Company shall pass a special resolution and file with the registrar Form MGT-14 within 30 days of passing the resolution
(5) Company shall within 30 days of allotment file with the registrar the Return of allotment in Form PAS-3.
(6) Company shall update the register of members maintained under section 88 of the Companies Act, 2013 after issuing preference shares.
(7) The company may redeem the preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders.
(8) Preference shares may be redeemed as given below:
- At pre-fixed time or happening of a particular event
- Any time at the company’s option
- Any time at the shareholder’s option
(9) Notice of redemption of preference shares must be filed by the company with the Registrar of Company (ROC) in Form SH-7 along with altered Memorandum of Association (MOA) with the fee and within 30 days of redemption of preference shares.
(10) Once the allotment is made, the company shall within 30 days of allotment, file with the Registrar Are turn of allotment in Form PAS.3, along with the fee.
(11) The company shall deliver the share certificates of allotted shares within 2 months from the date of allotment.
(12) Intimate the details of allotment of shares to the Depository immediately on allotment of such shares.