Share capital v/s share premium

Kindly check the provisions u/s 56(2)(viib) effective from 01-04-2012 before issuing shares at an excess premium.

Originally posted by : CHIRAG
	Kindly check the provisions u/s 56(2)(viib) effective from 01-04-2012 before issuing shares at an excess premium.

Thank you Chirag. I went though the provision. 

My basic reason for issuing share at premium is to avoid the 2% cost of RoC. It is too high in thin margin businesses. 

I have an order book of 1 crore and for that i need to pump the money. But if i have to spend 2% to RoC,  my margins get severly impacted. Is there a way out to bring in the capital and avoid this cost.

Can i issue shares at premium and avoid the fees for authorized share capital? Can i argue that based on my order book, I am issuing shares at premium? Is tht justified?

There are several ways for the inflow of cash... you can take the deposits from directors or relatives. It will not attract any cost, however, you have to pay interest.

Thank you Ankur. That is what i will have to finally resort too... but i was thinking whether there is any other structure i could infuse money... smething tht wud have the effect of share capital...

it would also help me strengthen my balance sheet and apply for facility from bank... preference shares, debentures, share premium... something tht wud not pinch me... and avoid unnecessary cost of RoC fees...