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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?
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Answer Posted / 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.
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