The premium amount collected from issue of shares can be used for the following purposes:
(A) To purchase own shares.
(B) To issue fully paid bonus shares to the extent not exceeding unissued share capital of the company.
(C) To write-off preliminary expenses of the company.
(D) To write-off fixed assests from books.
Choose the correct answer from the options given below:
The premium amount collected from issue of shares can be used for the following purposes:
(A) To purchase own shares.
(B) To issue fully paid bonus shares to the extent not exceeding unissued share capital of the company.
(C) To write-off preliminary expenses of the company.
(D) To write-off fixed assests from books.
Choose the correct answer from the options given below:
Solution
Section 52 allows securities premium to be used for issuing fully paid bonus shares, writing off preliminary expenses, writing off share or debenture issue expenses, providing premium payable on redemption, and buying back own shares. Writing off fixed assets is not a permitted use, so (D) is excluded and (A), (B) and (C) remain.
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