CAPITAL REDEMPTION RESERVE.

28 June 2018

Why Capital Redemption Reserve is created? What is the purpose behind it's creation?

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3 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14670 Points)
Replied 28 June 2018

Capital redemption reserve is created out of profit for redemption of preference shares . same will be redemed only after fully paid .

raghuram grandhi (6 Points)
Replied 28 June 2018

Why should we have to create CRR?

Yogesh (JAIPUR) (2 Points)
Replied 28 February 2019

1. When capital reduce by a company & buy its own share then company create CRR,

as a : New ES/PS are issued to redeem the old PS the difference between Face value of PS & new share will transfer CRR

2. CRR transfer in undistributed profit,( General Reserve,Profit and loss)

3. CRR fund utilized only for issuing Bonus Share.(no dividend can be distributed out of this fund.

4. Importance of CRR

:- Maintain Working capital

:- To protect the interest of creditors

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