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Question
State, whether the following statements is True or False.
A public company can issue shares at only rate of discount.
Options
True
False
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Solution
False
Explanation: Shares can be issued at a discount by public or private companies, subject to a few conditions (as per Section 79 of Companies Act, 1956) that are mentioned below:
➢ Shares to be issued at a discount must be of an existing class already issued, i.e. a new class of shares cannot be issued at a discount.
➢ Shares issued at a discount must be authorised by the resolution passed in the general meeting of a company and approved by SEBI.
➢ The resolution should specify the maximum rate of discount (not exceeding 10%).
➢ At least one year should have elapsed since the company commenced business.
➢ After the permission of SEBI, the shares to be issued at a discount should be issued within two months.
