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Redemption of preference shares
Accountancy
'To ensure that the interests of outsiders are not reduced, Section 55 provides for redemption of only fully paid-up shares.' Based on about please explain how redemption of partly paid-up shares affect the interests of outsiders?
Answers (1)
Partly paid up shares have some liability to the company. If you redeem them, the creditors would be at a loss - since someone who was supposed to pay money to the company is not paying. Also when fully paid up shares are redeemed, we transfer FV of the shares to CRR to ensure that the amount is not distributed as dividend.
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