why share issued over the par value? or why issue share by
share premium?
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Answer Posted / pooja gupta
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.
| Is This Answer Correct ? | 29 Yes | 4 No |
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