Redeemable Capital

[Ali Akbar]

AOA

According to the definition of redeemable capital, redeemable capital should not be interest based.

If a company issues non participatory redeemable capital, then what will be the return on it, bcz nor the interest is allowed neither the participation in profit.

Waiting for kind replies from those who have expertise of corporate laws.

ICAP is the best.

[Ali Akbar]

AOA

I know senior members can help me inn solving this problem. So waiting for kind replies.

ICAP is the best.

[Ali Akbar]

May I ask where are the 'best members of this forum'. Cant they help me?

ICAP is the best.

[smraza]

Dear Ali,
Can u quote me the section which says that Redeemable capital should not be interest based,
I think u r referring the section 2(30-A), but it doesnt say that R.C should be non interest based.
It says that R.C. includes "any other security or obligation not based on interest other than an ord. share of the company"
the above defn. has included the TFCs, PTCs etc. specifically as R.C. bcaz these are specific terms commonly used and included in R.C. and these are interest bearing.
Therefore in case of non participatory R.C. the return is usually the interest on related securities.
In Pakistan u can see lot of Non Participatory TFCs (interest bearing) issued by various companies.
I hope this will clear ur confusion.
Take care.

SMR

[Ali Akbar]

Take the case of 'any other securities not based on interest'. What will be return in this case?

ICAP is the best.

[smraza]

then Those securities must be participatory,
If the company is going to issue a non participatory, non interest based securities, who will invest in the company???

SMR