The Capital Redemption Reserve (CRR) Account may be applied for which of the following?
ADistribution as dividend
BPaying up unissued shares to be issued as fully paid bonus shares
CBuy-back of further shares
DRedemption of debentures
Answer & Solution
Correct answer: B. Paying up unissued shares to be issued as fully paid bonus shares
1. Step 1: Sec 69(2) — CRR may be applied in paying up unissued shares to be issued as fully paid BONUS shares.
2. Step 2: CRR is otherwise not freely distributable.
3. Step 3: Hence (B).
_Source: ICAI BoS CA Inter Paper 1, Ch 12 "Buy-Back of Securities"_