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Security premium

tushar (to get guidelines) (24 Points)

21 January 2014

what are the uses of security premium reserves

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5 Replies

harish ragav (student-IPCC) (407 Points)
Replied 21 January 2014

You can use it for buy back of shares... but if security premium collected in cash only you can use for buy back of share...and it is also used for write of miscellaneous expenditures.... And u can use it for redemption of shares... regards, Harish Ragav

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 21 January 2014

Pls refer to section 78 of the Companies Act 1956 for the uses of premium....

Regards

shubham (student) (238 Points)
Replied 21 January 2014

along with sec 78 of companies act under sec 77A for buyback of shares also securities premium can be used.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 21 January 2014

See Section 78 of company act 1956.

CA Bada Sanjay Kumar Reddy (CA) (69 Points)
Replied 21 January 2014

A Comapny can use its Seurities Preimum as per Section 78 of the Companies Act, 1956 for the following reasond

1) to issue to its members fully paid bonus shares;

2) to write off its preliminary expenses; (Became redundant since prelimanary expenses should be written off immediately after commencement of the business routed through Profit and Loss A/c)

3) to write off the expenses of or the commission paid or discount allowed on any issue of securities or debentures of the company or

4) in providing for the premium payable on the redemption of any redeemable preference securities or any debentures of the company.