Can securities premium account be used as working capital

Companies Act 2013 1340 views 3 replies

DEAR FRIENDS,

CAN SECURITIES PREMIUM ACCOUNT BE USED AS WORKING CAPITAL OF A PRIVATE COMPANY AS PER COMPANIES ACT, 2013?

 

Replies (3)
According to Indian Company Act 1956, the amount of security premium may be used only for the following purposes: To write off the preliminary expenses of the company. To write off the expenses, commission or discount allowed on issued of shares or debentures of the company. To provide for the premium payable on redemption of redeemable preference shares or debentures of the company. To issue fully paid bonus shares to the shareholders of the company.

My question is that a Pvt. CO. Issues shares at premium just to avoid share capital crossing rs.5 cr and to save the stamp duty etc. Can this amount be freely used for any business purpose? Is there some restrictions in the new companies act,2013.

No there is  no restriction as such in Companies Act 2013 and you can freely use amount of share premium.  However, you have to take care of Sec.56 of  Income Tax Act which provides that if shares are issued at premium in excess of actual value of the shares then  the excess amount will be treated as income from other sources and will be taxed.

 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
19 May 2026
Fundraising Expert

MentorsWorld Ventures Private Limited

Ahmedabad

Others

View Details
Company
26 May 2026
Senior Accountant cum purchase Manager

Vardhaman Group of India

Pimpri Chinchwad

CA Inter

View Details
Company
Featured 28 May 2026
SEMI QUALIFIED/ CA DROPOUTS/ ARTICLES

T R SOOD & CO

New Delhi

CA Inter

View Details
Company
01 June 2026
Audit, Taxation & Compliance Executive

R P S K & Associates

Nashik

CA Inter

View Details
Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details
Company
27 May 2026
Audit Assitant

Virender K Gupta and Co

New Delhi

B.Com

View Details
Company
26 May 2026
Audit executive

vdsr & co LLP

Chennai

CA Inter

View Details
Company
23 May 2026
Article Assistant

Geeta Manchanda & CO.

New Delhi

CA Inter

View Details