Section 254K — Corporations Act 2001 (Cth)

Other requirements about redemption

A company may only redeem redeemable preference shares:

(a) if the shares are fully paid‑up; and

(b) out of profits or the proceeds of a new issue of shares made for the purpose of the redemption.

Note 1: For a director’s duty to prevent insolvent trading on redeeming redeemable preference shares, see section 588G.

Note 2: For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection 254L(3). Section 79 defines involved.

Sourced from the Federal Register of Legislation at 17 May 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au. Verify the current text against the official source before relying on it.

Related sections

s 254G — Conversion of shares
s 254H — Resolution to convert shares into larger or smaller number
s 254J — Redemption must be in accordance with terms of issue
s 254L — Consequences of contravening section 254J or 254K
s 254M — Liability on partly‑paid shares
s 254N — Calls may be limited to when company is externally‑administered

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