Which is true about Reserve Capital?

Correct option is A

Reserve Capital refers to that portion of the un-called capital of a company which the company decides, by passing a special resolution, will be called up only at the time of winding-up. This amount acts as a financial cushion for creditors when the company is being liquidated.
Hence, the correct answer is (a) It is to be called at the time of winding-up of the company.
It is not a part of called-up capital, rather it is part of un-called capital. Also, no charge can be created on reserve capital, and it cannot be used for business expansion. It is strictly reserved for the winding-up scenario.
Information Booster
· Reserve Capital is created only by passing a special resolution.
· It acts as a safety fund for creditors during liquidation.
· It is a portion of the un-called capital, not yet demanded by the company.
· Reserve Capital cannot be used in normal business operations.
· It becomes due only when the company enters winding-up proceedings.