Which is a reason for redemption of shares Increase bank Contractual obligation to do so Company is under capitalised

Redemption of shares is when a company buys back its own shares from shareholders, typically at a pre-determined price or date. This reduces the number of outstanding shares and returns capital to shareholders.

• Increase bank: When a company redeems shares, it pays cash to the shareholders. This decreases the company's bank balance, it does not increase it. So, this is incorrect.
• Contractual obligation to do so: Companies can issue certain types of shares, like redeemable preference shares, with specific terms that require the company to buy them back after a certain period or upon certain conditions. This creates a legal and contractual obligation for the company to redeem them. This is a valid reason.
• Company is under capitalised: Under-capitalization means the company has insufficient capital. Redeeming shares reduces the company's capital and cash reserves, which would worsen an under-capitalized situation, not improve it. So, this is incorrect.

Therefore, the most appropriate reason is a contractual obligation.

The correct reason is Contractual obligation to do so.