Reduction of capital(URGENT)

919 views 2 replies

 

URGENT

 

A company issued 98000 1% Non Commulative Convertible Preference Shares of Rs.100/- each for a sum of Rs.98,00,000/- and according to the term of issue one preference share of Rs.100/- is convertible into one equity shares of Rs.10/- at premium of Rs.90/- per share within a period of three years from the date of allotment.

 When the company will convert the preference share into equity share, the preference share of Rs.98 lacs will be converted into equity share of Rs.9.80 lacs and Rs.88.20 lacs will be transferred to Share Premium Account.

 Please advice whether aforesaid conversion tentamounts to reduction in share capital required court approval. 

Regards

Replies (2)

YES IT AMOUNTS TO REDUCTION OF CAPITAL AS PER SECTION 100 OF COMPANIES ACT. U SHOULD HAVE DIVISIBLE PROFIT UPTO 88.20 LACS FOR TRANSFER TO CAPITAL REDEMPTION RESERVE.

DIVISIBLE PROFIT MEANS THE RESERVES AVAILABLE FOR DISTRIBUTION OF DIVIDEND.

GENERAL RESERVE/PROFIT AND LOSS A/C..................DR 8820000

         TO CAPITAL REDEMPTION RESERVE                                                8820000


NO NEED TO TAKE COURT PERMISSION.

WHEN CONVERTED REQUIRED TO FILE E-FORM-2 FOR ALLOTMENT AND E-FORM-5 FOR REDUCTION IN CAPITAL

Will need further consideration here, Please refer to the regulation for Securities Premium account. It should be treated equivalent to Capital, further there seems no reason for creating Capital Redemtion Reserve on Conversion of preference shares.

Further this will not amount to reduction in share capital.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
22 June 2026
Finance Manager- Chartered Accountant

Triveni Turbine Limited

Bengaluru

CA

View Details
Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
29 June 2026
Accountant (Finance & Compliance)

TRIEYEZ

Kolkata

CA

View Details
Company
ARTICLESHIP 24 June 2026
CA Article Trainee

Rahul Dang & Associates

Pune

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details
Company
20 June 2026
Assistant Accounts Manager

Fintax Professionals

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 08 June 2026
Internal & Taxation Article

O P Bagla & Co LLP

New Delhi

CA Inter

View Details