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Capital redemption reserve
What is the purpose of capital redemption reserve? why its create? why nominal value of preference shares only should transfer? why not premium?
Replies (1)
When company redeem its shares out of its profit which was otherwise available for distribution as divident, the value of shares through which issued share capital account is reduced is transfered to capital redemption reserve.
Share Premium once received can be utilised for specific purpose as mentioned in Act only hence it is not used.
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