Question

State the provisions of Companies Act 2013 for the issue of shares at a premium.

Answer 1

1. Shares can be issued at a price above face value (premium).
2. Premium amount must be credited to Securities Premium Reserve.
3. It can be used only for specific purposes like:

   • Issuing bonus shares

   • Writing off preliminary expenses

   • Paying premium on redemption

   • Buyback of shares

4. Must be shown separately under “Reserves and Surplus” in the Balance Sheet.