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Redemption of Preference Shares - Class 11 Video Lecture

FAQs on Redemption of Preference Shares - Class 11 Video Lecture

1. What is redemption of preference shares?

Ans. Redemption of preference shares refers to the process of repaying or buying back the preference shares issued by a company. It allows the company to regain ownership of the shares and return the capital to the shareholders.

2. How is redemption of preference shares different from redemption of equity shares?

Ans. The redemption of preference shares is different from the redemption of equity shares in terms of priority and voting rights. Preference shares have a fixed dividend and hold priority in repayment over equity shares. On the other hand, equity shares represent ownership in the company and have voting rights.

3. Can a company redeem preference shares before their maturity?

Ans. Yes, a company can redeem preference shares before their maturity, subject to the terms and conditions mentioned in the preference share agreement. However, it is important to note that early redemption may involve certain costs or penalties as per the agreement.

4. What happens to the shareholders when preference shares are redeemed?

Ans. When preference shares are redeemed, the shareholders receive the agreed-upon redemption price per share. Once the shares are redeemed, the shareholders no longer hold any ownership rights in the company and do not receive any further dividends or benefits associated with the preference shares.

5. What are the reasons for a company to redeem preference shares?

Ans. Companies may choose to redeem preference shares for various reasons, such as reducing the financial burden of paying regular dividends, improving the company's financial structure, restructuring the capital, or returning excess capital to shareholders. The decision to redeem preference shares is usually based on the company's financial goals and capital requirements.

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Jan 11, 2025 Last updated

Redemption of Preference Shares - Class 11 for Class 112025 is part of Class 11 preparation. The notes and questions for Redemption of Preference Shares - Class 11 have been prepared according to the Class 11 exam syllabus. Information about Redemption of Preference Shares - Class 11 covers all important topics for Class 112025 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Redemption of Preference Shares - Class 11.

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