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    Question

    Under the Companies Act, there are specific regulations

    governing the utilization of the amount received as premium on securities. These funds, often recorded in the Securities Premium Account, can be used for several defined purposes. However, one of the following options is not an allowable use of these funds. As per the relevant section of the Companies Act, which of the following is not a permissible utilization of the amount received as premium on securities?
    A Issuing fully paid bonus shares to the members Correct Answer Incorrect Answer
    B Writing off preliminary expenses Correct Answer Incorrect Answer
    C Purchase of fixed assets Correct Answer Incorrect Answer
    D Buy back of its own shares Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    As per the Companies Act, the amount received as premium on securities is credited to the Securities Premium Account and can be utilized for specific purposes such as issuing fully paid bonus shares to members, writing off preliminary expenses, and buying back its own shares. However, it cannot be used for purchasing fixed assets.

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