Question

If equity shares are brought back out of the free reserves, amount equal to the

face value of equity shares bought back should be transferred to ​

Answer 1

The amount should be transferred to the Capital Redemption Reserve Account

• The Buyback of equity shares is governed by Section 68 of the Companies Act, 2013 and refers to the refund of equity share capital.
• In any financial year, the repurchase of equity shares must not exceed 25% of the company's paid-up equity capital.
• The redemption account is a form of reserve held by an entity limited by shares.
• The shares alleged to be redeemed are purchased out of the company's earnings and are transferred to the Capital Redemption Reserve Account