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accumulated or reserve capital (Reserve Capital)

When a company decides that a part of the company’s capital will be called for at the time of dissolution of the company, then that part of the capital is called reserve capital. In other words, reserve capital is that part of the uncalled capital which a company has earmarked to call for only at the time of winding up and for the purposes of winding up. The company may fix this amount by passing such a special resolution. The company can demand this amount from the shareholders only if the assets of the company remain insufficient to pay the liabilities at the time of winding up. [Section 65] Such capital can be converted into ordinary capital only with the permission of the court. No charge can also be generated against the reserve capital.

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