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REDEEMEPTION OF PREFERENCE SHARES
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
Replies (3)
As per section 55 (2) (c) of the company act 2013 , company has to transfer sum to CRR
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
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.
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