Capital Redemption Reserve (CRR)

Tax Glossary Definition

Capital Redemption Reserve (CRR)

A Capital Redemption Reserve is a reserve created by a company when it buys back its own shares or redeems preference shares, ensuring that the capital structure of the company is maintained. The CRR acts as a buffer to protect the company’s equity base after reducing share capital.

Example: When a company redeems preference shares, it transfers an equivalent amount to the Capital Redemption Reserve to maintain its statutory capital requirements and financial stability.

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