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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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