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Question

As per Companies Act, 2013, the balance in Securities Premium account can be used for the following purposes except _________

A issue of fully paid bonus shares Correct Answer Incorrect Answer
B issue of Rights shares at a discount Correct Answer Incorrect Answer
C to write off preliminary expenses Correct Answer Incorrect Answer
D for buy-back of own shares or securities Correct Answer Incorrect Answer
E It can be used for all of the above purposes Correct Answer Incorrect Answer

Solution

·    As per Section 52, when a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a “securities premium account” ·    Securities Premium can be used for : o issue of fully paid bonus shares o to write off preliminary expenses o write-off commission paid/discount on issue of shares or debentures o for premium payable on redemption o for buy-back of own shares or securities

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