Pref share

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Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2014 wat do u mean by capital redmption rsrv..??

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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02 December 2014 When shares are redeemed out of profits a sum equal to nominal amount of shares redeemed is to be transferred out of profits to the capital redemption reserve account. This amount should then be utilised for the purpose of redemption of redeemable preference shares. This reserve can be used to issue of fully paid bonus shares to the members of the company.

Where a company purchases its own shares out of free reserves, then a sum equal to the nominal value of the share so purchased shall be transferred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.

Also refer section 55 of the Companies Act 2013.

Link: http://www.mca.gov.in/SearchableActs/Section55.htm

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