Capital redemption reserve fund

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Updated: Aug 20, 2021

When a company redeems preference shares, a sum equal to the shares’ nominal value redeemed is transferred to this fund. The fund is treated as part of the paid-up capital of the company and cannot be used for dividends. The fund can, however, be used to pay up bonus shares.

Reference: The Penguin Business Dictionary, 3rd edt.



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