TOPIC 52: QUICK REFERENCE TO “Issue of Securities at Premium”
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Quick Reference to " Issue of Securities at Premium" :-
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Legal Provision:-
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Section 52 of Companies Act, 2013.
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Points:-
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1. Issue of Securities to Premium means selling of Security at a price above par value.
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2. There is no prohibition for issue of Securities at Premium.
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3. The amount should be transferred to "Securities Premium Account".
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4. The amount of premium is not available for distribution of dividend.
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5. The Securities Premium cannot be considered as Profit of the Company.
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6. The Securities Premium can be utilized for :-
# Writing off Preliminary expenses of the Company.
#Buy - Back of shares.
#Writing off Commission paid.
#Issue of Bonus Shares.
# Premium payable on Redemption of Redeemable Preference Shares.
#Premium payable on Redemption of Redeemable Debentures.
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7. #FV 10. & MP 10 = at par.
# FV 10. & MP 12 = at Premium.
# FV 10. & MP 8 = at discount( but it's not allowed except in case of Sweat Equity Shares)
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Regards
ACA SOURAV BAGARIA