Redeeming Preference Shares

Key Points

The constitution sets the redemption terms. If redemption uses company capital, all directors must make a solvency statement and file it with ACRA. The guide distinguishes funding from a new share issue specifically made for the redemption, which does not attract those capital-redemption requirements. File the redemption notice through the share-information service; the listed transaction is free.

Confirm the Shares and Redemption Funding

Before planning the redemption payment, check that the preference shares are redeemable under the constitution and that the relevant terms cover when and how redemption may occur. ACRA states that the shares must be fully paid up. As practical preparation, match the redemption to its share class, holder records and payment status; not every preference share is redeemable on demand.

Identify the funding route separately. If company capital is used, all directors must make the solvency statement and a copy must be filed with ACRA. The stated exception concerns proceeds of a new issue made specifically for the redemption; an unrelated historic capital raising should not simply be described as that exception without checking its purpose. Keep the funding explanation with the supporting records so that the filer can select the correct treatment.

A company officer or corporate service provider can use Update Shares Information and select the notice of redemption of redeemable preference shares. ACRA provides a transaction-specific filing guide from the official page. Check that the filing identifies the actual redemption, rather than an allotment, transfer or ordinary share buyback. The transaction is listed as free and immediately processed; that processing description does not remove the prior fully-paid, constitutional and funding checks.