This is illustration 3 of buy back of share. Why were Rs. 300 transferred to CRR account in the last entry? The actual buy back is Rs. 500. Can anyone tell me this?

Question

SMMV · Answer

As per Companies Act, 2013 – Section 69, this transfer to CRR is compulsory when buy-back is done out of free reserves or securities premium.In a buy-back, the company's share capital gets reduced. But the share capital is considered a protection (or safety cushion) for the company’s creditors. So, when the company uses its free reserves or securities premium to buy back shares, the capital is reduced. To balance that reduction and maintain the same capital base (which protects creditors), an equal amount is transferred to the Capital Redemption Reserve (CRR).

Aryan · Answer

Okay got it thanks to all of you

s · Answer

https://youtu.be/mBUA5SjtzHU?si=qoCsMobkHgwCZuQ_

... · Answer

Pref shares issue huye the forbuy back so the amount of pref share issueshould be reduced from 250000 × 20% ×100

Nimisha · Answer

See in question notes to account part they have issued preference shares and that amount is deducted from 500

This is illustration 3 of buy back of share. Why were Rs. 300 transferred to CRR account in the last entry? The actual buy back is Rs. 500. Can anyone tell me this?

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