Does Pvt Ltd company having negative reserve balance can issue equity share at premium ?
Pl provide government guidelines if any in this regards.
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Pvt ltd issue of share at premium
Replies (5)
Yes. In law, the premium of the shares is not in anyway linked to reserves and surplus position of the Company. The Company can charge any amount of premium provided if there are takers to those shares.
is there any rules / guidelines / case law / section etc in this regards ?
Please refer section 78 of the Companies Act w.r.t utilisation of share premium account. Thre is no rule or guidelines whatsoever regulating issue of shares at premium.
what about applicability of New Company Act 2013 ?
Does it allow to issue share at premium with having negative reserve ?
Yes. No change in the position under Companies Act, 2013 with regard to the issue of shares at premium. Section 52 allows it. The only notable change is that unlike in 1956 act, companies are prohibited from issuing shares at discount except issue of sweat equity shares.
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