Question
What is Reserve Capital? Does it differ from 'Capital Reserve'?
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Answer
According to section 65 of the Companies Act, a Company may, by a special resolution, determine that a portion of its uncalled Capital shall not be called up except in the event of winding up of the Company. In such a case, that portion of the subscribed capital becomes Reserve Capital. It is available only for the creditors on the winding up of the company.
Difference:
Reserve Capital is created out of uncalled capital whereas capital reserve is created out of capital profits.
Difference:
Reserve Capital is created out of uncalled capital whereas capital reserve is created out of capital profits.
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