why share issued over the par value? or why issue share by
share premium?
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Answer Posted / ramdoyal meghna
Shares are issued at a premium:
to ensure fairness between old and new shareholders
if 2800 shares issued at £1 then shares would have a nbv of
9800/4800 = £2.04 and original shareholders would have lost £1.46
per share book value
the retained profits have been earned by original shareholders and
issuing the new shares at a premium ensures new shareholders buy
a stake in those earnings
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