AD Ltd. is unable to redeem its preference shares amounting to ₹ 50 lakh along with the outstanding dividend of ₹ 5 lakh thereon on the due date for the reason of non-availability of adequate cash resources. In the light

As per Section 55(3) of Companies Act 2013, states that when a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares here in after referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be deemed to have been redeemed. The issue of further redeemable preference shares or the redemption of preference shares under this section shall not be deemed to be an increase or, as the case may be, a reduction, in the share capital of the company. Hence, AD Ltd. may redeem the due preference shares by issuing further redeemable preference shares of ₹55 lakh (including dividend), after obtaining the consent of preference shareholders holding not less than three-fourths in value of such shares (i.e., ₹37.50 lakh) and the approval of the Tribunal. On such issue, the unredeemed preference shares shall be deemed to have been redeemed, and the transaction shall not be regarded as an increase or reduction of the company's share capital.