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Redemption of Preference Shares

In illustration 4. the number of shares to be issued you have considered face value and also securities premium i.e 37500/60 but we should only consider the face value right for the number of shares to be issued? Is my understanding correct? because in illustration-2 you have considered only the face value.


sai krishna teja

sai krishna teja

CA Inter

480

06-May-20 12:43

23

Answers (4)

There are two aspects. One - to ensure minimum CRR, you consider face value two - when there is a question of minimum balance, you consider issue price.


Suraj Lakhotia

Suraj Lakhotia

Admin

06-May-20 13:01

There are two aspects. One - to ensure minimum CRR, you consider face value two - when there is a question of minimum balance, you consider issue price.

Sorry sir I couldnâ??t understand.Can you please explain further?


sai krishna teja

sai krishna teja

CA Inter

480

06-May-20 13:06

Sorry sir I couldnâ??t understand.Can you please explain further?

If you have to compute CRR amount and ensure that minimum amount has to be transferred to CRR or no amount has to be transferred, then you will consider face value to consider number of shares to be issued. If you need money (In illustration four, CRR is not a constraint, but bank balance is), you need to decide how many number of shares (minimum) are to be issued.


Suraj Lakhotia

Suraj Lakhotia

Admin

06-May-20 13:26

Okay..Thank you sir


sai krishna teja

sai krishna teja

CA Inter

480

06-May-20 13:38