Regarding caro
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 September 2013
Hi ,
IS SHARE PREMIUM IS INCLUDED UNDER PAID UP CAPITAL AND RESERVES TO KNOW THE THRESHOLD LIMIT OF CARO.
IS SHARE PREMIUM IS INCLUDED UNDER PAID UP CAPITAL AND RESERVES TO KNOW THE THRESHOLD LIMIT OF CARO.
Ajay Mishra
(Expert)
06 September 2013
Share premium account or security premium account, though treated as paid-capital of company for a limited purpose, cannot be treated as reserve fund and, therefore, a company cannot write off its loses against share premium account unless it is permitted by law. Unless and until there is diminution of share capital and corresponding reduction in share premium account, no company can be allowed to write off or adjust loss against share premium account. Company court cannot mechanically approve minute of banking company to adjust its cumulative losses against share premium, especially when such company has already appropriated all reserves for writing off its losses and bad debt. [Global Trust Bank Ltd., In re (2005) 57 SCL 164 (AP)].
But Yes, share premium will be covered under reserve of the company for the purpose of CARO.
Share premium account or security premium account, though treated as paid-capital of company for a limited purpose, cannot be treated as reserve fund and, therefore, a company cannot write off its loses against share premium account unless it is permitted by law. Unless and until there is diminution of share capital and corresponding reduction in share premium account, no company can be allowed to write off or adjust loss against share premium account. Company court cannot mechanically approve minute of banking company to adjust its cumulative losses against share premium, especially when such company has already appropriated all reserves for writing off its losses and bad debt. [Global Trust Bank Ltd., In re (2005) 57 SCL 164 (AP)].
But Yes, share premium will be covered under reserve of the company for the purpose of CARO.
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