Question
Securities premium can also be utilized for three other purposes besides (i) ‘Issuing fully paid bonus shares’ and (ii) ‘Buy back of shares’. State those purposes.
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Answer
The amount received as securities premium can be used other than ‘issue of bonus shares’ and ‘buy back of shares’ for the following purposes:
- In writing off the preliminary expenses of the company.
- For writing off the expenses, commission or discount allowed on issue of shares or debentures of the company.
- For providing the premium payable on redemption of redeemable preference shares or debentures of the company.
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