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Question
As per Companies Act 2013, the balance in Securities Premium Account cannot be utilized for ______.
Options
Writing off the preliminary expenses of the company.
Writing off expenses of or commission paid or discount allowed on issue of shares or debentures of the company.
Issuing partly paid up bonus shares to the existing shareholders of the company.
Providing for premiums payable on redemption of redeemable preference shares or debentures of the company.
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Solution
As per Companies Act 2013, the balance in Securities Premium Account cannot be utilized for issuing partly paid up bonus shares to the existing shareholders of the company.
Explanation:
The Companies Act of 2013 lays out the acceptable uses of securities premiums to guarantee the open and appropriate use of the money raised by the business through the issuing of shares at a premium. Protecting shareholder interests and preserving the integrity of the company’s capital structure are the major goals of the prohibition on utilizing securities premiums for the issue of partially paid bonus shares.
