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1) Transfer to capital redemption reserve account can be made:

Yes, transfer to the capital redemption reserve account can be made. The capital redemption reserve account is a type of reserve account maintained by a company when redeeming its own shares. It is used to set aside funds from the company's profits or share capital for the purpose of redeeming or repurchasing its shares.

2) Premium can be given on redemption of preference shares:

Yes, a premium can be given on the redemption of preference shares. When a company chooses to redeem its preference shares, it has the option to pay a premium in addition to the nominal value of the shares. The premium represents an additional amount paid to the shareholders upon the redemption of their preference shares, typically as a reward or compensation for their investment.

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Answer:

These shares shall be redeemed only out of the profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of such redemption.

These shares shall be redeemed only when they are fully paid.

Where such shares are redeemed out of the profits of the company, then a sum equal to the nominal amount of the shares to be redeemed shall be transferred out of such profits to a reserve called the Capital Redemption Reserve Account.

In case of such class of companies whose financial statement comply with the accounting standards, the premium payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed. And for every other company, such premium payable on redemption shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed.

The premium payable on redemption of any preference shares issued on or before the commencement of this Act, shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed.

The Redeemable preference shares may be redeemed within a period not exceeding 20 years from their issue date subject to the prescribed conditions, in case of company limited by shares, if so authorised by its articles. However, a company engaged in the setting up and dealing with of infrastructural projects may issue preference shares for a period exceeding 20 years but not exceeding 30 years, subject to the minimum redemption of 10% of such preference shares per year from the 21st year onwards or earlier, on proportionate basis, at the option of the preference shareholders.

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