Section - 78 - Companies Act, 1956

Section - 78 - Application of premiums received on issue of shares

Issue of shares at premium and discount

Application of premiums received on issue of shares.

78. (1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called "the

[securities] premium account"; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the

[securities] premium account were paid-up share capital of the company.

(2) The

[securities] premium account may, notwithstanding anything in sub-section (1), be applied by the company—

(a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;

(b) in writing off the preliminary expenses of the company;

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