Question

Securities premium can also be utilized for three other purposes besides

1) 'Issuing fully paid bonus shares' an

2) 'Buyback of shares'. State those purposes.

Answer 1

As per the Section 78 of the Companies Act of 1956, the amount of securities premium can be used by the company:

1) To issue fully paid bonus shares to the members

2) To write-off preliminary expenses of the company

3) To buy-back its own shares or other securities