Share premium
This query is : Resolved
Kaushal Kumar Ojha
(Querist)
26 December 2011
Please guide, whether Share Premium amount in Pvt Ltd company or Public Limited Company (closely held by family members - unlisted) can be utilized for the aquisition of Fixed Assets or for meeting short term funds requirement.
Mukta Suyal
(Expert)
27 December 2011
In accordance with Section 78(2) of the Companies Act, 1956, the securities premium can be utilised only for the:-
1. issuing fully paid bonus shares to the members,
2. wrting off the balance of the preliminary expenses,
3. writting off commission paid or discount allowed for the issue of shares/ debentures,
4. for premium payable at the time of redemption of redeemable preference shares.
So, I hope Mr. Ojha you got your reply that company is not permitted to use this fund fot the purchase of Fuxed Assets/ for meeting short term funds requirement.
1. issuing fully paid bonus shares to the members,
2. wrting off the balance of the preliminary expenses,
3. writting off commission paid or discount allowed for the issue of shares/ debentures,
4. for premium payable at the time of redemption of redeemable preference shares.
So, I hope Mr. Ojha you got your reply that company is not permitted to use this fund fot the purchase of Fuxed Assets/ for meeting short term funds requirement.
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