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Redeemable preference shares


Preference shares which the company reserves the right to redeem. The fact that the shares are redeemable must be stated in the balance sheet, together with the earliest and latest dates for redemption and any premium pay able. The shares may only be redeemed out of distributable profits or the proceeds of a further issue of shares. Where redemption is made out of profits, a sum equal to the amount redeemed must be put into a capital reserve, and this cannot be distributed.


Reference: The Penguin Business Dictionary, 3rd edt.