New Delhi, July 19: The government on Friday relaxed investment norms by allowing Indian companies to repay redeemable preference shares (RPS) to shareholders, including foreign partners, before completion of the minimum period of five years subject to certain preconditions. The Finance Ministry eased the norms for prematured redemption of RPS up to September 30, 2003.
Although the power or right to prepay RPS is vested with the company, the government made it mandatory for companies to get shareholders nod for actual prepayment of the shares.

Moreover, an official release said that pre-mature redemption should not exceed the face value of shares.
"The funds for making such prepayment by the company shall need to be in conformity with provisions in the Companies Act 1956 relating to redemption of preference shares," the release said, adding all transactions under this scheme would have to be performed on or before September 30. Bureau Report