Companies Act Section 69 — Transfer of certain sums to capital redemption reserve account

CHAPTER IV SHARE CAPITAL AND DEBENTURES

Commercial / Corporate

Summary

Sub-section (1) states that when a company buys back its own shares using its free reserves or the securities premium account, it must move an amount equal to the face value of those purchased shares into a special account called the capital redemption reserve account. The company must also show the details of this transfer in its balance sheet.

Sub-section (2) explains that the company can use the capital redemption reserve account to pay for new shares that have not yet been issued, and these shares can then be given to the company's members as fully paid bonus shares.

Official Text

(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.

(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.