First issue of a private limited company on premium??

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 August 2011 Dear Friends,

Please can somebody tell me that whether a private company can issue it's first 1,00,000 capital on premium???

Aditya Maheshwari

Aditya Maheshwari (Expert)
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08 August 2011 No it cannot be as the allotment is deemed to be made when company is incorporated and hence cannot command any premium at that time as no business has commenced.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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08 August 2011 You should know the basis of charging premium. It is on the basis of net worth of the company. New company has the 0 (Zero) net worth and hence it is not possible to charge premium on the issue of share capital at the initial stage.

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