As per S.55 of the Companies Act 2013, CRR equivalent to Nominal Value of Preferance Shares Redeemed shall be created out of Reserves available for Distribuion as dividend.
My Queries are as follows:
- In Case of inadequacy of Reserves for Creation of CRR, what can the company do?
- If company has redeemed without Creation of CRR , what is the penalty?
- Section also specifies that CRR has to be created if Redemption is made out of profits only. Are there any other methods of Redemption and what's the Difference between the above and those methods?
- Can inadequacy of profits for CRR Creation be considered as company being in a position not able to redeem the shares or pay dividend as per sub section 3 of Sec 55 & thereafter follow the procedures mentioned under that subsection?
- For Creation of CRR whether Balance of reserves available for dividend should be considered from last audited Financials or as computed before the day of redemption or creation of CRR?
Kindly resolve the above queries & Participation from anyone is appreciated.
CAclubindia
