Special Weekend Offer! Upgrade to CAclubindia Pro & enjoy 10% OFF with code SAVE10. Subscribe Now!

Issue of shares on premium

Co Act 2013 200 views 1 replies

Law Aspire

755 Points Joined August 2009

What is the reason for issuing shares on Premium .

For example Sometimes the Company has Nominal value of each share as 10 and issue at a Premium of Rs. 990. What is the benefit to Company
If the Company issue share at a face value of Rs. 1000/- and not at premium then what will be the difference?

Replies (1)

Ankur Agarwal

2 Points Joined April 2017

premium and discount comes from the idea demand for the shares. The face value is what it is when the shares were introduced in the market. but with the changing demand and supply situations . The market value of a share might increase or decrease . Here then the concept of premium. That even though the face value is 10 but if now the market value of such share is 1000 the issue will be for 1000