What is redeemable preference shares ?

1.	What is redeemable preference shares ?
Answer» \tThe fund provided by the owners in to a business is known as capital. You know that capital of the business depends upon the form of business organization.\tFrom ownership point of view, there are number of business organizations like, sole proprietorship business, partnership business, cooperative societies, joint stock companies etc.\tTotal capital of the company is divided into a number of small units of fixed amount and each such unit is called a share.\tThe fixed value of a share register with the registrar of Companies is called face/ nominal value. However, a company can issue shares at a price different from its nominal value or face value.\tAs the total capital of the company is divided into shares, the capital of the company is known as share capital.\tA company can issue two types shares equity shares and preference shares. The issue of preference shares is one of the important sources of capital of a company.\tRedemption is the process of repaying an obligation at predetermined amounts and timings.\tThe redeemable preference shares are issued on the terms that share holders will at a future date be repaid amount which they invested in the company.\tAccording to the\xa0Companies Act, 1956, a company can issue only redeemable shares i.e. at present a company cannot issue irredeemable preference shares.

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