PREMATURE REDEMPTION OF RPS ALLOWED
The Government has
decided to allow Indian companies to redeem existing Redeemable
Preference Shares (RPS) even before completion of the minimum
period of 5 years subject to the following conditions:-
- This provision of pre-mature redemption
of existing RPS will be available upto 30th September,
2003.
- The initiation power/right of
prepayment is vested with the Company. However, the actual pre-payment
is subject to the consent of the holder of RPS.
- The pre-mature redemption should
not exceed the face value.
- The funds/resources for making
such prepayment by the Company shall need to be in conformity
with provisions of the Companies Act, 1956 relating to redemption
of Preference shares.
After completing
the transactions, the companies would be required to furnish full
particulars thereof to the Director (FIPB), Ministry of Finance,
Department of Economic Affairs and the Exchange Control Department
of the Reserve Bank of India, Central Office, Mumbai within 30
days of completion of such transactions. All transactions under
this scheme shall be performed on or before 30th September,
2003.
The Government had
earlier allowed Indian Companies to mobilize foreign investment
by issue of Preference Shares to finance their projects/industries.
Revisions/modifications in the Preference Shares guidelines are
announced from time to time.
