Question

Assertion (A): Securities Premium may be used for issue of partly-paid bonus shares.

Reason (R): Securities Premium may be used for issue of partly-paid or fully paid bonus shares.

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

Options

• (A) is correct, but (R) is wrong.

• Both (A) and (R) are correct.

• (A) is wrong, but (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are wrong.

Explanation:

Assertion (A) is false, Securities Premium cannot be used to issue partly-paid bonus shares; it can only be used for fully paid bonus shares.

Reason (R) is also false, It incorrectly states that Securities Premium can be used for partly-paid shares, which is not allowed under law.