Question

Which of the following statements is true for 'Reserve Capital'?

Options

• It is the portion of the uncalled capital to be called only in the event of winding up of the company.

• It is that part of the authorised capital that is actually issued to the public for subscription.

• It is a part of the subscribed capital which has been called-up to subscribe.

• It is that portion of the called-up capital which has been actually received from the shareholders.

Answer 1

It is the portion of the uncalled capital to be called only in the event of winding up of the company.

Explanation:

Reserve Capital is that part of uncalled share capital which the company decides to call only at the time of winding up. It cannot be called during the normal course of business.