October 3, 2022

Volume XII, Number 276

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September 30, 2022

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Redeeming the Irredeemable

The Investment Association has published guidelines concerning the redemption or cancellation of irredeemable preference shares. The aim of the guidelines, which are of general application to listed companies, is to promote market confidence in irredeemable preference shares as an asset class and avoid reputational risk for issuers.

The guidelines require issuers to follow a fair process, and have regard to the fair market price, when considering the redemption of irredeemable preference shares.

Key to ensuring a fair process is consultation by an issuer with the irredeemable preference shareholders such that they have sufficient time and information to enable them to reach a properly informed decision on the proposed redemption. Achieving a fair market price is crucial.

In following the guidelines, an issuer will also need to respect the position of its ordinary shareholders and consult them equally with regard to the fair process and fair market value to be offered to preference shareholders. The board of the issuer will also be duty bound to act in the best interests of the company as a whole.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume IX, Number 51
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About this Author

Squire Patton Boggs' global Financial Services Practice provides high quality legal, regulatory and public policy services to a wide range of participants in the financial services sector, including:

  • Financial institutions, capital sources and other financial intermediaries 
  • Their investors, suppliers and customers  
  • End-users of financial services (e.g., corporate borrowers) 
  • Regulatory authorities

Their team includes several former regulators and former executives and internal legal counsel at financial institutions and other financial...

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