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Share issued at discount
Sec.53 prohibits a company to issue shares at discount. But then how the shares are issued at discounted price in case of Rights Issue? Is there other provision regarding it??
Replies (2)
If we look at to the provision of section 53 it says the share can't be issued less than its face value.
But in case of Right shares the shares are issued less than market value and not face value.
e.g.XYZ LTD can't issue share having face value of Rs. 10 at price less than 10.
But it can issue share having face value of 10 and market value of 20 at less than 20 but not less than 10.
But in case of Right shares the shares are issued less than market value and not face value.
e.g.XYZ LTD can't issue share having face value of Rs. 10 at price less than 10.
But it can issue share having face value of 10 and market value of 20 at less than 20 but not less than 10.
But as per the 2017 Amendment, Sec.53 says the share can't be issued at a 'discounted price'. Earlier it was 'Discount'.
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