How do you transfer reserves to share capital?

Answer 1

To transfer reserves to share capital, a company typically follows a formal process that involves board approval and possibly shareholder approval, depending on the jurisdiction and company bylaws. The company will pass a resolution to capitalize the reserves, which may involve issuing new shares or increasing the nominal value of existing shares. The reserves are then reclassified as share capital on the balance sheet, reflecting the change in the company's equity structure. It's important to ensure compliance with local laws and regulations during this process.