Shares issued at a premium, Business Law and Ethics

Shares Issued At A Premium:

A company may at times issue its shares at a price above their nominal value, i.e at a premium. This may be necessitated by the fact that the company's shares which have already been issued are being sold in the open market at a price which is above their nominal value. Since such an issue does not jeopardize the position of the company's creditors there is no legal requirement that the issue be confirmed by the court. However, Section 58 (1) provides that where a company issues shares at a premium, where for cash or else or there may a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account called "the share premium account". However the section further offers that the share premium account shall be governed by the provisions of the Companies Act relating to the reduction of the share capital of a company as if the share premium account were paid share capital of the company. This means, in effect, that the funds credited to the share premium account are not paid out by the company except in the legitimate course of its business.

Sub-section 2 provides that the share premium account may however be applied by the company:

a)      To pay up unissued shares of the company which are to be issued to members of the company as fully-paid bonus shares;

b)      To write off the preliminary expenses of the company;

c)      To write off the expenses of any issue of shares or debentures of the company, or the commission paid or discount allowed on such issue, or

d)      To provide for the premium payable on redemption of any redeemable preference shares or debentures of the company

Posted Date: 1/12/2013 4:13:57 AM | Location : United States







Related Discussions:- Shares issued at a premium, Assignment Help, Ask Question on Shares issued at a premium, Get Answer, Expert's Help, Shares issued at a premium Discussions

Write discussion on Shares issued at a premium
Your posts are moderated
Related Questions
What is the meaning of potential harmonization On reviewing the literature on coordination, convergence, and potential harmonization of antitrust laws, we discover several dif

Explain passive personality principle passive personality principle states that jurisdiction may be exercised in respect of events occurring outside a State's own territory whe

Determine about the Opportunistic policy cycle We now turn back once again to study the behaviour of the decision maker who, ultimately wants to return to the office in future.

QUESTION 1 S.38(2) and S.38(3) of the Employment Relations Act require that an employee should be given the "opportunity to answer the charge" before the employer decides to te

Question 1: (i) Distinguish between industrial relations and employee relations. (ii) State the environmental factors that affect employee relations. (iii) Give five r

Question 1: i) What are the main characteristics of good faith bargaining? ii) What are the main criteria used in the US labour relations system to test good faith bargain

QUESTION 1 What are the scope and limitations of administrative law? Is the demarcation clear? What are the criteria by which you would decide on which side of the line a case

Theobald: Conversely there such I take to be the duty of the auditor; then he must be honest.... i.e. like he must not certify that what he does not believe to be true, reason

Select a specific industry or corporation and analyse the factors that determine a competitive or anticompetitive outcome;    - Factors such as profit motives interacting with the

REGULATIONS REGARDING ALCOHOL PURCHASE AND STORAGE As YOU know, ethyl alcohol is one of the laboratory chemicals which can be misused. To control its purchase, storage and use,