Recently while appraising a loan proposal I noticed that the
company was a newly formed company. While allotting the
capital among the share holders the shares were allotted at
a huge premium. What is the reason for showing a huge premium?
- 3 Answers
- 5958 Views
- I also Faced
- E-Mail Answers
Answers were Sorted based on User's Feedback
Answer / ajay
Issuing the shares at premiums is a matter of great
concern. if a share is issued at premium it may reflect
various things like wise.
-Market Requirement of Product or services.
-Quality of prod. or services
-Market Capitalization of pro. & ser.
-board competency
-Brand loyality
etc.
As the rate of above goes higher, the result is high rate
of preimium and vice-e-versa.
considering the same there may a practical scenario, take a
private company for eg.-
-Authorised capital - Rs 50.00 lacs (50,000 equity of Rs.
100 each.)
-Share issued and subscribed 20,000 shares @ Rs.425
(including premium of Rs. 325.to person other than promoters
-Shares issued otherwise than for cash to the Promotrs is
29,000
Shares subscribed by promoters as asubscriber to memorandum
is 1,000 equity.
NOW UNDERSTAND THE CAPITAL AND CONTROLLING STRUCTURE OF THE
CO.-
PROMOTERS INVOLVEMENT IN CAPITAL IN CASH OR OTHERWISE-
EQUITY (in no.)- 30,000 or 60% voting power i.e control in
hand
VALUE PAID FOR THE SHARES- 30.00 LACS (1.00 LACS IN CASH
AND OTHER 29.00 LACS IN KIND)
OTHERS INVOLVEMENT IN CASH-
EQUITY- 20,000 OR 40% voting power.
VALUE PAID FOR THE SHARES-Rs. 85.00 lacs (including premium
amount of Rs. 65.00 lacs)
Let's check the Banks position-
There is Rs. 86.00 lacs in the co.(s) banks account outof
which only Rs. 1.00 lacs is promoters contribution.
This all happend due to TTHE CORPORATE, MANAGEMENT, BRAND,
PRODUCT OR SEVICE STANDARD OF THE CO. WHICH ULTIMATLY
MOTIVATES THE CORPORATES TO ISSUE THE SHARES ART PREMIUM.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / reena
The Company might be opening with a huge project and for
that purpose the Company might require huge capital . As
the Company wants to issue less capital (number of shares),
it might be issuing the shares at a premium for raising teh
funds.
| Is This Answer Correct ? | 1 Yes | 2 No |
"X" company paid the salaries to staff. Then what are the entry? Is debiting the employee A/c, or Salary A/c? If salary A/c debited, how we can find if "a" employee salary paid or not? If we debiting the employee A/c, how to find how much amount we paid for salaries?
what is the path of insurance calculation?
Does any one attented HSBC audit compliance test? Please let me know asap. suraj
what is Producer of a wounding up of a company?
How should a charity account for its branches?
where will be effect the amount of depreciation in company final account? If it will effect in P&L A/c & Balance Sheet also than will amount be same in both sheet?
what cunditions of charged of exise duty
can a shareholder or promoters waive his or their right for dividend ? if yes then how and when before or after book closure or in the AGM ? what will be its treatment in accounts?should any provision be there in the Articals of Company for that?
i have cleared c.s inter. for the purpose of training i want to know the companies who are providing training of c.s in punjab state.please help me in this.
MY QUESTION IS THAT IS WHEY WE SELL THE UPS IN THE MARKET BUY FROM THE IMPORT WHAT THE DUTY WE WILL FORWARD TO THEM.
how does one calculate goodwill by super profit method
Does provisions need to be subtracted from reserves if net worth is calculated on the basis of share capital based method
Audit 
