Varun Gupta (3 Points)
25 February 2017
manoj
(student)
(5205 Points)
Replied 25 February 2017
CRR Pertain to Capital Redemption Reserve fund which is created to secure the creditor & also it is mandatory to create while making the buy back of Share capital,b'coz after buy back the share capital reduce by such amount.(means the owner has paid before the liability being pay of the outsider & this give unsecurity to Creditor, that why it is mandatory to create the same with nominal value of share...) CRR can be used for as per the Act for Instance... Issue of Bonus share,some extend to the payment of Dividend after approval from Central Government.
Varun Gupta
(3 Points)
Replied 25 February 2017
| Originally posted by : manoj | ||
 |
CRR Pertain to Capital Redemption Reserve fund which is created to secure the creditor & also it is mandatory to create while making the buy back of Share capital,b'coz after buy back the share capital reduce by such amount.(means the owner has paid before the liability being pay of the outsider & this give unsecurity to Creditor, that why it is mandatory to create the same with nominal value of share...) CRR can be used for as per the Act for Instance... Issue of Bonus share,some extend to the payment of Dividend after approval from Central Government. |
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Thank You very much Manoj but what I was asking is that FROM WHICH ACCOUNT we should create CRR i.e what should be the sequence of FREE RESERVES AND SECURITY PREMIUM ACCOUNT ??
Sana Sultana Mussu
(Student)
(5119 Points)
Replied 25 February 2017
CA Revanth Bharathwaj M
(Freelance consultant in Direct Tax and Financial Reporting)
(373 Points)
Replied 26 February 2017
Vishal
( CA student)
(394 Points)
Replied 27 February 2017
Siddharth Goel
(Chartered Accountant)
(3031 Points)
Replied 27 June 2018
Hi,
As per the Companies Act 2013, CRR is created from the Profits of the company which only includes the Free Reserves.
Hence, Free Reserve includes following items
Therefore, CRR can be created from the above mentioned accounts in the same order of preference.
Harsh Bang
(19 Points)
Replied 27 March 2019
Selva Ganesh
(7 Points)
Replied 16 May 2019
Hi,
CRR should be created only out of Free Reserves in-case of Redemption of Pref. Shares.
But, Securities Premium Account can used to create CRR in-case of Buyback as per Sec 68(1) (Explanation II - For the purposes of this section, "free reserves" includes securities premium account) r.w Sec 52 (3)(c) & 69 (1) of Companies Act, 2013
shahyar husain
(1240 Points)
Replied 13 November 2020
S Booma Devi
(2 Points)
Replied 15 April 2022
Yes.
Net worth = Share capital + all Reserves
Capital structure = share Capital + specific reserves
Which means,
Capital structure = Net worth - Free reserves
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