Laura Plc has an issued share capital of £500,000 divided into 400,000 £1 ordinary shares and £100,000 £1 preference shares. The articles of association of Laura Plc provide that the holders of the preference shares shall be entitled to an annual dividend of 15% in preference to the ordinary shareholders. The articles also provide that the rights attached to any shares shall be deemed to be varied by the reduction of capital paid up on those shares. Advise the board of directors who at the moment feel that the company has too much capital and wishes to pay off the preference shares at par in reduction of capital. The preference shares stand at £1.25 in the market.