Write short note on Capital Redemption Reserve Account.

As per Section 55(2) (c) of the Companies Act, 2013 (Act), where preference shares of a company are proposed to be redeemed out of profits of the company, a sum equal to the nominal amount of preference shares to be redeemed shall be transferred to Capital Redemption Reserve account. The provision of the Act on reduction of capital under section 66 shall apply as if the Capital Redemption Reserve account is part of the paid-up share capital of the company. Again, under section 69 of the Act dealing with buy-back regulations, where a company purchases its own shares out of free reserves or security premium account, a sum equal to nominal value of the shares bought back shall be transferred to Capital Redemption Reserve account and also disclosed in the balance sheet. The amount in Capital Redemption Reserve account can be applied under section 69(2) of the Act by the company in paying up unissued shares of the company to be issued to members of the company as fully paid-up bonus shares under section 63 of the Act.