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REDEEMEPTION OF PREFERENCE SHARES

20 October 2018

when preference shares are redeemed out of profits available for distribution of dividend a sum equal to nominal value of Share redeemed shall be transferred to CRR is there any reason please explain clearly

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3 Replies

prasad Nilugal (3914 Points)
Replied 20 October 2018

As per section 55 (2) (c) of the company act 2013 , company has to transfer sum to CRR

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Anjali Kolse (103 Points)
Replied 20 October 2018

at the time of redumption capital base of company reduce equal amt to the value of redumption, hence to maintain CAPITAL BASE a sum equivalent to the nominal value of shares so redeem shall be transferred to CRR

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prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 20 October 2018

Redemption is not taken to mean reduction of Authoried Capital of the Company , redemption dose not lead to reduction of atual capital . When company issue redemeable preference share , as per company act libale to redem within period of 20 years form the date of issue . For payment of such liabilities we have to transfer out of profit to CRR.