Question

Assertion (A): Securities Premium can be used for issue of Partly Paid Bonus Shares.

Reason (R): The Companies Act, 2013 prescribes that Securities Premium Account can be used for issue of Fully paid-up or partly paid-up Bonus Shares.

In the context of above two statements, which of the below options is correct?

Options

• Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is false but Reason (R) is true.

• Both Assertion (A) and Reason (R) are false.

Answer 1

Both Assertion (A) and Reason (R) are false.

Explanation:

Securities Premium can be used for issuing fully paid bonus shares, not partly paid bonus shares. Therefore, both the Assertion and the Reason are incorrect.