Capital Redemption Reserve

[ATIF AHMAD CHAUDHREE]

Dear all members (Specially Sir KAMRAN)
Asalam o alaikum

kindly tell me treatment of capital redemption reserve which is created for preference shares capital. when redemption of preference shares is complete or preference shares convert in to ordinary shares, what will we do with capital redemption reserve?
kindly help me with support of law and annual report if any..

[D.Raja Jokhio]

Dear Mr. Atif

We retain Capital Redemption Reserve Fund(CRRF) only for the redemption of fund, even if we have redeemed all preference shares. For utilizing it for any other purpose we have to follow reduction of capital procedures u/s 96.

But as per section 85(1)(c), if we want to redeem through CRRF than we transfer the amount from profits to such fund, that equals to redemption fund. So i think there will not be any amount left in such fund after redemption of preference shares.

If there is any mistake in my answer, than seniors please correct it.

Regards,

[D.Raja Jokhio]

Dear Mr. Atif

In 2nd line of 2nd paragraph there are words "amount equals to Redemption fund" it should be " amount equals to redemption amount.

Regards.