Section 69: Transfer of certain sums to capital redemption reserve account
This section is for managing the transfer of funds to the capital redemption reserve account when a company buys back its own shares and using this account to issue bonus shares.
The section, clause by clause
What the section says
In plain terms
(1)Where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.
When a company buys back its own shares using free reserves or securities premium account, it must move a sum equal to the nominal value of the shares bought to the capital redemption reserve account and show this transfer in the balance sheet.
(2)The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.
The company can use the capital redemption reserve account to pay for unissued shares that will be given as fully paid bonus shares to its members.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The words “with imprisonment for a term which may extend to three years or” omitted by Act 29 of 2020, s. 14 (w.e.f. 21-12- 2020).
- 2. Subs. by s. 14, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.