23 January 2015
Experts, Sec. 68 of cos. Act 2013 - speaks about use of security premium for buy back. It is right to say that security premium can be used for premium on buy back, but my question is "Can we use the security premium to be transferred to CRR on buy back of equity share capital, i.e. for the proportion of capital amount on buy back. What are the clarifications of MCA in this regard. Reference is pleased.
(1)Where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to the CRR reserve account and details of such transfer shall be disclosed in the balance sheet.
(2)The CRR account may be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.
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