Redeeming redeemable preference shares

What are redeemable preference shares

Redeemable preference shares are shares that your company can buy back (redeem) later. Your company's constitution must specify the terms of the redemption, such as when and how you can redeem these shares.

More details: Understanding company shares

Conditions to redeem

Your company can redeem redeemable preference shares if you meet these conditions:

The shares must be fully paid up

You are unable to redeem redeemable preference shares unless they are fully paid up.

Requirements when redeeming using company capital

If you redeem the shares using your company's capital (not from a new share issue), you need to:

• Have all directors make a solvency statement for the redemption; and

• File a copy of the solvency statement with ACRA.

You do not need to meet these requirements if you redeem the shares using proceeds from a new share issue (made specifically for the redemption). This is not treated as redemption out of the company's capital.

More details: Section 70 of the Companies Act 1967

Filing a notice of redemption

This guide explains how to file a notice of redemption of redeemable preference shares to notify ACRA. If your company wants to redeem redeemable preference shares, you must file this notice.