Interested to Buy Any Domain ? << Click Here >> for more details...
why share issued over the par value? or why issue share by
share premium?
- 5 Answers
- 25604 Views
- I also Faced
- E-Mail Answers
Answer Posted / anuj arora
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.
Application of funds collected as premium are specified in
Section 78 of Companies Act, 1956 which reads as follows
(1) Where a company issues shares at a premium, whether for
cash or otherwise, a sum equal to the aggregate amount or
value of the premiums on those shares shall be transferred
to an account, to be called "the 1[securities] premium
account"; and the provisions of this Act relating to the
reduction of the 1[securities] capital of a company shall,
except as provided in this section, apply as if the
1[securities] premium account were paid-up 1[securities]
capital of the company.
(2) The 1[securities] premium account may, notwithstanding
anything in sub-section (1), be applied by the company-
(a) in paying up unissued shares of the company to be
issued to members of the company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or commission paid
or discount allowed on, any issue of shares or debentures of
the company; or
(d) in providing for the premium payable on the
redemption of any redeemable preference shares or of any
debentures of the company.
(3) Where a company has, before the commencement of this
Act, issued any shares at a premium, this section shall
apply as if the shares had been issued after the
commencement of this Act.
Provided that any part of the premiums which has been so
applied that it does not at the commencement of this Act
form an identifiable part of the company's reserves within
the meaning of Schedule VI, shall be disregarded in
determining the sum to be included in the 1[securities]
premium account.
| Is This Answer Correct ? | 5 Yes | 1 No |
Post New Answer View All Answers
what is correct accounting treatment for preliminary exps and pre-operative Expsas per AS 26? or any other applicable AS?
Is form 38 mandatory to issue c form in up. thru online mode
I want to validate Customer credit payment with customer invoice, When billing time, the system check the customer credit payment, if customer credit is lesser than customer bill, system should not allow the billing further process. Can I configure in sap
Does provisions need to be subtracted from reserves if net worth is calculated on the basis of share capital based method
Does any one attented HSBC audit compliance test? Please let me know asap. suraj
what is mean by tax holiday?
Treatment of Government grant and its utilization in P
How to analyse the day to day sensex Points or Forex Values?
I want to know that , If we called a person for one day for drive our company van or any other purpose. so how it will accounted in our (i.e companies) Books of accounts....
How often is the stock market ticker updated? 15sec? 30sec?
Is it possible to list only a portion of Equity Shares leaving the balance as unlisted?
hat is the meaning of the capital ique,and hat is capital,and ahat is ique
Information regarding shop & establishment registration of propiertor ship & require document for this
what is rate of service tax and form no. of service tax ? wt rules of service tax a particuler once .?
1) What is the steps of delisting the listed company 2) How to spliting the listed company shares 3) Which way the company should function when it has paidup capital is equal or more than 5,00,00,000/- (I mean which way the company should do it work in the company Act 1956. Is the company have to appoint a CS and and managing director of a any other things which is compulsory for these kind of company which paid up capital is 5,00,000/-
