Meaning of Free Reserves

[ERO0097082 Gaurav Agarwal]

Dear Professional Colleagues

Section 180(1)(c) of The Companies Act, 2013 provides that the Board of Directors of a Company shall require the consent of the Company by way of a Special resolution if it borrows money, where the money to be borrowed, together with the money already borrowed by the Company exceed the aggregate of the Paid up Share Capital and Free Reserves.

Further Sec. 2(43) defines Free Reserves as a Reserve which as per the latest Audited Balance Sheet is available for distribution as dividend.

My query is whether Securities Premium Account is considered in calculating Free Reserves of the Company for the purpose of Section 180 and what are the specific items that are considered in calculating Free Reserves?

Plz reply.

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Every success is built on the ability to do better than good enough

With Regards
GAURAV AGARWAL
Mob. No. +(91)98306-84682

[neha agrawal]

Dear Gaurav,

Free Reserve for section Section 180(1)(c) of The Companies Act, 2013 shall only include distributable Profit as Devidend..and Securities Premium Account shall not be considered.

As per Companies Act, 1956 Securities Premium Account is consedered to be the part of Free Reserves..

Kindly correct me.

Regards,

Neha Agrawal

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[Sumit Binani]

Free Reserves have been clearly defined in Sec 2(43) of CA 2013.

Free Reserves does not include Securities Premium Account except for the purpose of Sec 68 of CA 2013

Securities Premium Account cannot be considered in Free Reserves while calculating the limits prescribed under Sec 180

Sumit Binani

9830810003

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Date: Wed, 18 Mar 2015 13:29:13 +0530
Subject: [CA RUNGTA PD] Meaning of Free Reserves
From: gaurav...@icai.org
To:

[cocsiriou...@gmail.com]

Not only for section 68 also to write off Prem. on redemption of debenture or preference share.