use of amt of share premium
This query is : Resolved
20 July 2009
A pvt. ltd co. collected amt on share premium. I want to know the practical use of this amt. It should be deposited in a bank or A FDR can be m ade and against it , a loan can be taken or anything else. Please respond as it is very urgent and important.
20 July 2009
Securities Premium Amount can be utilised only in accordance with the provisions of Section 78 of the Companies Act, 1956.
Depositing the physical amount in a bank or creating an FD out of the amount has not restrictions. It is the end use of the Securities Premium Account that carries the restrictions.
Depositing the physical amount in a bank or creating an FD out of the amount has not restrictions. It is the end use of the Securities Premium Account that carries the restrictions.
20 July 2009
Securities premium account can be utilized only for the following four purposes (As laid down in Sec 78 of Companies Act, 1956):
• For issuing bonus shares
• For writing off preliminary expenses
• For writing off debenture issue expenses/discounts on issue of debentures etc
• For providing premium payable on redemption of redeemable preference shares or Debentures.
• For issuing bonus shares
• For writing off preliminary expenses
• For writing off debenture issue expenses/discounts on issue of debentures etc
• For providing premium payable on redemption of redeemable preference shares or Debentures.
22 July 2009
You may also use it for Buy Back of Equity shares.
Check Section 77A (1) (ii)
Regards
Check Section 77A (1) (ii)
Regards
22 July 2009
I know sec. 78 which gives how to use the money. If one donot use it according to sec 78, then this amt is to be kept in a bank account obviously. But this is not so beneficial for the company. I wnat to know it can be invested? How big companies use/invest their share premium account.
23 July 2009
Private limited company can invest anywhere they want.
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