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Discussion > Accounts > A/c entries >

Discount on shares

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na

[ Scorecard : 186]
Posted On 05 February 2013 at 00:00 Report Abuse

What can't a company issue shares at a discount unless it is a reissue? What is the logic behind it?


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Jag Bhushan Sharma
Faculty in a B-School

[ Scorecard : 541]
Posted On 07 February 2013 at 05:08

The logic behind the law that a company cannot make the first issue of shares at a discount is:

1. This means that the project from the very beginning is not viable, then why start it and risk investors money.

2. Dishonest promoters may issue shares to themselves at discount and later on issue shares to general public at par or premium, making unreasonable gain for themselves.

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