Shares are issued over the par value or at premium when the 
companies have good income and reputation in the market and 
general public are ready to buy the shares above the par 
value and the amount of premium is decided through book 
building process by biding.

The amount equal to the premium is transferred to the 
securities premium account and this account can be only 
utilised as per section 78(2) of the companies Act, 1956.

We can say that premium is the extra amount which the 
company can take from investors due to its good income 
generating capacity.

Shares are issued over the par by

a) Listed companies as per the SEBI guidelines. Some times 
companies like Reliance power can misuse market dynamics to 
issue shares at premium, while it makes no sense. 
b) Unlisted private companies and there is no regulation.

Even a new company can issue shares over par value. e.g. a 
company may bring in Rs.one crore against a paid up capital 
of only Rs.one lac to save the fees payable to the 
government which is dependent on the authorised capital of 
the company.