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Redemption of preference shares

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    Redemption of preference shares

    For redemption of preference shares there is a clause that: A sum equivalent to the nominal amount of shares being redeemed shall be transferred to the Capital Redemption Reserve.
    My question is: After preference shares get redeemed where the nominal amount of shares come from to be transferred to the Capital Redemption Reserve.
    Doesn’t a company return nominal value to shareholders while redemption in order to transfer the same value to the Capital Redemption Reserve?

    #2
    CRR Transfer

    Originally posted by Sujan View Post
    For redemption of preference shares there is a clause that: A sum equivalent to the nominal amount of shares being redeemed shall be transferred to the Capital Redemption Reserve.
    My question is: After preference shares get redeemed where the nominal amount of shares come from to be transferred to the Capital Redemption Reserve.
    Doesn’t a company return nominal value to shareholders while redemption in order to transfer the same value to the Capital Redemption Reserve?
    It comes from the P&L Reserve - its a book entry that your Accountant will do for you when preparing the year end accounts.

    Rquired otherwise the Capital of the company will be reduced to the detriment of the creditors.

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