Question

Happy Days Ltd. was formed with an authorised capital of ₹50,00,000 divided into 5,00,000 equity shares of ₹10 each. The company issued prospectus inviting applications for 4,00,000 equity shares. The company received applications for 3,70,000 equity shares. During the first year, ₹8 per share were called. Suman holding 7,000 shares and Zia holding 5,000 shares did not pay the first call of ₹3 per share. Zia's shares were forfeited after the first call and later on 3,000 of the forfeited shares were re-issued at ₹7 per share, ₹8 called up.

For what purpose securities premium account Cannot be utilized?

विकल्प

• Amortization of preliminary expenses

• Issue of Fully Paid Bonus Shares

• Distribution of Dividend

• Buy Back of own shares

Answer 1

Distribution of Dividend

Explanation:

As per Section 52(2) of the Companies Act, 2013, Securities Premium Account cannot be used for paying dividends.