Capital redemption reserve requirement on share buybacks mandates transfer and restricts use to issuing fully paid bonus shares. Where a company purchases its own shares out of free reserves or the securities premium account, a sum equal to the nominal value of the shares purchased ... Summary
Capital redemption reserve requirement on share buybacks mandates transfer and restricts use to issuing fully paid bonus shares.
Where a company purchases its own shares out of free reserves or the securities premium account, a sum equal to the nominal value of the shares purchased must be transferred to the capital redemption reserve account and disclosed in the balance sheet; that reserve may be applied to pay up unissued shares to be issued to members as fully paid bonus shares.
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