Premium Paid under the scheme of Reduction of Share Capital

Chandrashekhar Laddha (CA & CS) (98 Points)

15 November 2010  

Dear Members,

Under the scheme of reduction of share capital, our company is returning the capital to shareholders which is in excess of want of company's requirement. The face value of share of the company is Rs. 10/- whereas fair value offered to be paid to equity shareholders is near to Rs. 50/-.

On the other hand, in our balance sheet particularly in reserve & surplus, we are having balance in share premium account, general reserve account, capital reserve account and credit balance of profit & loss account.

I request to all the member to guide me about the accounting treatment to be given to additional Rs. 40/- being paid to equity shareholders of the company. Please also cite relevant provision of the companies act if any.

Thanks in advance.

CA Chandrashekhar Laddha

+91 99252 37250