ARORA PREM AND ASSOCIATESDifference between Reserve Capital vs. Capital Reserve
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Difference between Reserve Capital vs. Capital Reserve
Following are the main points of distinction between reserve capital & capital reserve:
| Points | Reserve Capital | Capital Reserve |
| Meaning | Reserve capital is that part of the uncalled capital of a company which the limited company has decided by special resolution not to call except in the event and for the purpose of the company being wound up. | Capital reserves are created out of capital profit. Capital Reserve may be statutory capital reserve or non statutory capital reserve. |
| Need of Creation | Creation of reserve capital is not mandatory. | Creation of capital reserve is mandatory in certain cases. |
| Balance Sheet Disclosure | There is no need to disclose reserve capital in balance sheet. | Capital reserves are disclosed in balance sheet under the head “Reserves & Surplus”. |
| Writing Off Capital Losses | Reserve Capital cannot be used to write-off capital losses. | Capital reserves can be used to write-off capital losses. |
| Created out of | Authorized capital | Capital profits |
| Specific condition | Special Resolution should be passed at AGM | No such conditions |
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