Question

For what purpose securities premium account cannot be utilized?

Options

• Amortization of preliminary expenses

• Distribution of cash dividend

• Issue of fully paid bonus shares

• Buy Back of own shares

Answer 1

Distribution of cash dividend

Explanation:

According to Section 52(2) of the Companies Act, 2013, Securities Premium can be used only for specific purposes, such as:

• Deducting initial costs
• Deducting the fee or discount from the securities issue
• Issuing Bonus Shares with Full Payment
• Paying a premium when debentures or shares are redeemed
• Repurchase of one's own stock