Question

Can securities premium be utilised for the purchase of fixed assets? Give reason.

Answer 1

No, securities premium cannot be utilised for the purchase of fixed assets.

Reason:

As per Section 52(2) of the Companies Act, 2013, the use of securities premium is restricted to specific purposes such as:

1. Writing off preliminary expenses

2. Issuing fully paid bonus shares

3. Paying premium on redemption of shares/debentures

4. Writing off discount/commission on issue of securities

5. Buyback of securities