Issue of shares at a premium by private company

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visesh

visesh (Querist)
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30 July 2009 Can a private company issue shares at a premium? Is there any justification required?

Ankur Garg

Ankur Garg (Expert)
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30 July 2009 Yes it is very much possible.

A private company can issue shares at a premium. No justification required.

Regards

visesh

visesh (Querist)
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30 July 2009 Thanks, is it possible to issue the shares at a premium by a private limited company even if it a newly formed company?

Ankur Garg

Ankur Garg (Expert)
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30 July 2009 Yes. It is also very much possible.

It is possible to issue the shares at a premium by a private limited company even if it a newly formed company.

However, issue of shares on discount is not possible for a newly formed company as per section 79.

Rrgards

visesh

visesh (Querist)
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30 July 2009 thanks, yes i am aware of Sec. 79. If I may take this further, for the purpose of reduction of share capital, share premium account is to be considered as 'share capital', now if the authorised capital is say 5,00,000, issued cap is also 5,00,000, and share premium is say 2,00,000, is this a problem, for the total of issued cap + share premium is 7,00,000 which is more than auth cap or is it plain auth cap and issued cap, and share premium is only to be theortically reckoned when the question of incorrect usage is brought up?

Juhi

Juhi (Expert)
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28 March 2011 In case of a private company having debit balance of P & L (i.e. brought forward losses), how can issue of shares at premium (10+290) be justified.
Secondly what can be the legal repircation if a company issues shares at premuim despite having loss.
One important point here is that post issue at premium the net balance in reserve and surplus gets converted from debit balance to credit balance.

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