How does this work? Does it just sit there forever now?
My client has a capital redemption reserve created from a conversion of retained earnings into paid up ordinary shares.
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A capitalisation of reserves does not create a capital redemption reserve. The clue is in the name.
So in your case it sounds as if it should never have been there. In a case where it is correctly created and accounted for yes it stays there forever unless and until one of the few permitted uses is made of it - such as being capitalised as new share capital.
I don't know why it was created - may be there was a buy back some time back. However, bonus issue is one where it could be used for.
A capital redemption reserve should not have arisen on the issue of shares.
If you issue, say, 100,000 new £1 shares, funded from reserves, you debit the P&L reserve with £100,000 and credit share capital with £100,000. A capital redemption reserve does not come into it.
Gleaning what little I can from the garbled query, this company seems to have purchased its own shares, creating a CRR to the value of the initial shares.
As stated above, it can be used, but there isn't a huge number of options.
Leave it alone, don't poke it with a stick and it won't bite you. I've a company which has had a CRR of £1000 for 35 years. It's no bother.