Redeemable shares definition
What does Redeemable shares mean?
Pursuant to CA 2006, ss 684–686, any limited company having a share capital may issue redeemable shares of any class. However, a public company may only issue redeemable shares if it is authorised to do so by its articles of association. A private company’s articles may exclude or restrict the issue of redeemable shares but need not expressly authorise it.
The model articles provide a right for both a private company and a public company to issue redeemable shares.
The terms, conditions and manner of redemption may be determined by the directors (if they are authorised to do so), by the articles of association or by a resolution of the company. The resolution may be an ordinary resolution even though it amends the company’s articles of association.
Redeemable shares in a limited company may not be redeemed unless they are fully paid.