Can anyone tell me if there is any order of (Priortiness) transfer from free Reserves to CRR (if any one of them is not sufficent) ie. the amount equivalent to nominal value of the shares bought back in case follwing Reserves are given:
1. Security Premum A//c
2. General Reseve
3. P/L A/c (Cr)
Or we can Assume as We like?
According to me no such priority list is mentioned in 77A. but generally free reserves ie GR and PL is utilised first and then balance in Securites Premium A/c.
@ Richa Mam,
Thanks a lot , but is there any particular logic/reason behined it?
Probably since the existing reserves are the profits earned when the shareholders are the part of the owners for such reserves......
and Securities premium is only the amout paid to the company by the shareholders excess on the share's nominal value before they enter the company......though it is the part of something they have paid for the company........
I think securities premium should be utilised first as there are limited use of securities premium and other free reserves can be utilised for any pupose.
Including you have to transfer the amount of security premium on the bought back shares to the
General Reserve
For the shares which dont exist cant retain the premium collected on bought back shares in the securities premium a/c ....
But u still get confirmed from an expert/.......
Hi,
can you have any short note for Industrial Law and Auditing for ICWAI Inter.
I'm sorry sir, but i dont have any.
HI,
According to me, u have to first use balance in security premium A/c,as it has limited uses
(i.e.only 5 uses)and buy back is one of them.The order may like this,
1)security premium A/c
2)General reserve
3)Divinded equilisation Reserve
4)P & L A/c (cr)
CAclubindia
