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    Issue of Share at Premium

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    Ketaki
    The issue of shares at a premium in India refers to selling shares for a price higher than their face value. Companies can do this if authorized by their Articles of Association and approved by shareholders through a special resolution. The premium amount must be credited to a separate account called the securities premium account, which has restrictions on how the funds can be used. Companies must also file documents with regulatory authorities, adhere to accounting standards, and comply with other legal requirements when issuing shares at a premium in India.

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    Issue of Share at Premium

    Uploaded by

    Ketaki
    23 views2 pages
    The issue of shares at a premium in India refers to selling shares for a price higher than their face value. Companies can do this if authorized by their Articles of Association and approved by shareholders through a special resolution. The premium amount must be credited to a separate account called the securities premium account, which has restrictions on how the funds can be used. Companies must also file documents with regulatory authorities, adhere to accounting standards, and comply with other legal requirements when issuing shares at a premium in India.

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    ISSUE OF SHARE AT PREMIUM

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    ISSUE OF SHARE AT PREMIUM

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    The issue of shares at a premium in India refers to selling shares for a price higher than their face value. Companies can do this if authorized by their Articles of Association and approved by shareholders through a special resolution. The premium amount must be credited to a separate account called the securities premium account, which has restrictions on how the funds can be used. Companies must also file documents with regulatory authorities, adhere to accounting standards, and comply with other legal requirements when issuing shares at a premium in India.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views2 pages

    Issue of Share at Premium

    Uploaded by

    Ketaki
    The issue of shares at a premium in India refers to selling shares for a price higher than their face value. Companies can do this if authorized by their Articles of Association and approved by shareholders through a special resolution. The premium amount must be credited to a separate account called the securities premium account, which has restrictions on how the funds can be used. Companies must also file documents with regulatory authorities, adhere to accounting standards, and comply with other legal requirements when issuing shares at a premium in India.

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    ISSUE OF SHARE AT PREMIUM

    In company law in India, the issue of shares at a premium refers to the practice of
    selling shares to investors at a price higher than the face value of the shares. The
    premium amount represents the additional value attributed to the shares, often due
    to factors such as the company's financial performance, growth prospects, or other
    perceived advantages.

    Here are the key points regarding the issue of shares at a premium in India:

    1. Authorization in Articles of Association:


     The company's Articles of Association must authorize the issue of shares at a
    premium. If the Articles do not specifically permit it, an alteration to the
    Articles is required, and this would typically need approval from the
    shareholders through a special resolution.
    2. Determination of Premium:
     The premium on shares is determined by the board of directors based on
    various factors, including the financial health of the company, its future
    prospects, and market conditions.
    3. Approval from Shareholders:
     The issue of shares at a premium requires approval from the shareholders
    through a special resolution passed at a general meeting.
    4. Valuation Report:
     A valuation report may be required, especially if the premium is significant. A
    registered valuer provides an independent assessment of the company's
    valuation.
    5. Application to Regulatory Authorities:
     Companies may need to file relevant documents with the Registrar of
    Companies (RoC) and, if applicable, with the Securities and Exchange Board of
    India (SEBI).
    6. Allotment of Shares:
     After obtaining the necessary approvals, the company can proceed with the
    allotment of shares. The shares are typically allotted within a specified time
    frame as per the regulations.
    7. Receipt of Premium:
     The premium amount received on the issue of shares must be credited to a
    separate account called the "Securities Premium Account." This account can
    be used for specific purposes, such as writing off preliminary expenses, issuing
    bonus shares, or buying back shares.
    8. Filing of Return of Allotment:
     The company is required to file a return of allotment with the RoC, providing
    details of the shares issued at a premium.
    9. Compliance with Accounting Standards:
     The company must comply with relevant accounting standards while
    accounting for the premium received on shares.
    10. Utilization of Premium:
     The use of the premium is restricted, and companies are generally not
    allowed to use it for certain purposes, such as paying dividends or buying its
    own shares.

    It's essential for companies to adhere to the regulatory framework and fulfill all legal
    requirements when issuing shares at a premium. Non-compliance may result in
    penalties and other legal consequences. Seeking professional advice from legal and
    financial experts is advisable to ensure compliance with applicable laws and
    regulations.

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