Section 78 Securities Premium Account Utilization

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A. Prithvi Surya (Querist)
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05 March 2011 Dear Experts,

A Private Comapny had Securities Premium Account in its Balance Sheet. The Companay has issued fully paid Bonus Shares. In order to facilitate the Bonus Issue, it had to incur an expenditure to increase the authorised capital. It had also written off these expenses (ROC Expenses to increase authorised capital) to securities premium. Is it correct? Quick replies would be appreciated.

Thanking you in advance

CS ,CMA Shambhu Kr. jha

CS ,CMA Shambhu Kr. jha (Expert)
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05 March 2011 As far it is not appropriate to write off that expanses from securities premium Account coz, once we received securities premium account it can only be adjusted against specified expanses as mentioned .

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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05 March 2011 Prima facie,the company can do so by virtue of section 78(2)(c) of the Companies Act,1956.

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