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Converting preference shares

Converting preference shares

 I have a company with 100,000 preference shares which are soon to meet their redemption date.  The company has insufficient reserves to repay the full £100,000.  Can the shares be converted into a directors loan account?  

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By johnt27
17th May 2011 12:16

Rserves or cash

When you say the company has insufficient reserves I presume you mean cash. So long as the preference shareholders don't want cash immediately then converting to a DLA (assuming they are directors) is fine. You would need to check if there are any CGT issues for the shareholders because if they have tax to pay they might need the cash.

Alternatively the M&A's may allow the company or shareholders to defer redemption.

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