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Fixed Cumulative Preference Shares

Fixed Cumulative Preference Shares

Postby mawallace » Sat Jan 21, 2017 1:10 pm

Company has Fixed Cumulative Preference Shares. The 'unpaid' dividend amounts to £100,000.

The company has never made a profit and so can't pay the dividend. The shareholders wants to convert the preference shares into ordinary shares to 'tidy' up the balance sheet.

What happens to the 'unpaid dividend'? Will they have to pay it after conversion to ordinary shares as or will it simply get written off?

Is there any case law / Co Act which might help?
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Re: Fixed Cumulative Preference Shares

Postby atticus » Sat Jan 21, 2017 3:21 pm

If there is a hundred grand at stake, you should get good accountancy advice.
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Re: Fixed Cumulative Preference Shares

Postby jantra » Mon Jan 23, 2017 8:37 pm

The pref shares and divs rights attached can be acquired by the company and new ordinary shares can be issued as consideration. The shares issued will depend on share price, shareholder agreements, pre emption rights and a host of other issues.

There are tax consequences for the shareholder and company.

This is potentially complicated so seek advice from a good accountancy/tax firm
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