Rocking Infra Limited, a company engaged in the business of BOOT contracts of national highways is looking at raising funds for future projects by issue of redeemable preference shares. The Contract bid by the company ge

Section 55 of the Act provides that a company limited by shares may, if authorize by its articles, issue preference shares which are liable to be redeemed within a period not exceeding 20 years from the date of their issue subject to such conditions as may be prescribed. However, a company engaged in the setting up and dealing with infrastructure projects may issue preference shares for a period exceeding 20 years but not exceeding 30 years, subject to the redemption of a minimum of ten percentage of such preference shares per year from the 21 st Year onwards or earlier on proportionate basis, at the option of the preference shareholders. Thus, Rocking Infra Ltd being engaged in Infrastructure projects, can issue redeemable preference shares for a period between 20 years to 30 years, subject to the compliance with the provisions of Section 55. The section also provides for roll-over of the preference shares. Where a company is not in a position to redeem any preference shares to pay dividend, if any, on such shares in accordance with the terms of the issue, it may with the consent of the holders of three fourths in value of such preference shares and with the approval of NCLT on a petition made 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 shares, the unredeemed preference shares shall be deemed to have been redeemed. NCLT shall order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares, in the above case.