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Free Reserves : Meaning and Definition

"Free Reserves" meaning and definition - Companies Act 2013

As per Section 2(43) of the Companies Act 2013 “free reserves” means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend:

Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or

(ii) any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value,

shall not be treated as free reserves;


  1. Whether capital reserve is an example of free reserve ??

  2. AnonymousMay 06, 2017

    whether share issue expoense can be written off against free reserves?

  3. No it is not a free reserve because it is not available for distribution of dividend


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