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Issue of Shares at Premium

    IndianMoney.com Research Team | Tuesday, April 14,2009, 04:59 PM
 

A company may issue shares at a premium i.e. at a cost above its par value. The following conditions must be satisfied in relation with the issue of shares at a premium :

The total of premium must be transferred to an account to be called share premium account. The provisions of this Act relating to the decrease of share capital of the company will apply as if the share account premium account were paid up share capital of the company.

Share premium account can be used only for the following purposes :

  • In issuing totally paid bonus shares to members.
  • In Writing off preliminary expenses of the company.
  • In writing off public issue expenses such as underwriting commission, advertisement expenses, etc·
  • In providing for the premium payable paid on redemption of any redeemable preference shares or debentures.
  • In buying back its shares

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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