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
Explain the Universal Declaration on Human Rights Universal Declaration on Human Rights was passed by UNGA, entailing a comprehensive and detailed concept pertaining to rights

EXPLAIN THE AIR SPACE AND OUTER SPACE The scientific advancements made by mankind in the past 100 years are a lot more than the overall scientific development of last 1000 year

What is the territorial sovereignty The territorial sovereignty includes the land territory, the territorial sea, the seabed and the subsoil of the territorial sea. It also inc

QUESTION 1 (a) Briefly explain 4 functions involved in ensuring compliance with contract requirements (b) Explain how changes regarding variations and price adjustments are

Acceptance - Element of Contract However this is the external manifestation about assent through the offeree.  Regarding to acceptance an agreement comes with existence between

PROXIES - meetings and resolutions: By S.136(1), any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint one more person (

Capacity - Element of Contract Capacity to Contract However 'capacity' may be described like the legally documented right of a person to enter with a legally binding ag

APPLIED LAWS: However section 2 of the Interpretation and General Provisions Act specified like an "applied law" as:; (a)   here an Act of the legislature of another countr

Effect of Registration: S.16(2) of the Act provides that "from the date of incorporation mentioned in the certificate of incorporation the subscribers to the memorandum of a

Function and Powers of Chairman: In the case of National Dwellings Society v Sykes Chitty, J. stated: "It is the duty of the chairman, and his function, to preserve order,