Question

Explain the provision relating to utilization of the securities premium Account.​

Answer 1

Uses of Securities Premium Account

Explanation:

• Securities premium Account can use for provide bonus share.
• Securities premium Account can use as premium on redemption of debentures or shares .
• Securities Premium Account is used for preliminary expenses writing off Such as expenses of issue of shares.
• Securities Premium Account is used for buyback of its own shares.
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Answer 2

Securities Premium Reserve is the extra money charged on the face value of shares issued.

Explanation:

Utilization of Securities Premium Reserve:

Section 52(2) of the Companies Act, 2013 limits the use of the amounts received as premium on securities for the following purposes:

(i) It can be used to issue fully paid bonus shares to the members;

(ii) It can also be used to write off the preliminary expenses of the company;

(iii) It can also be used to write off the expenses of, or the commission paid or discount allowed on any issue of securities or debentures of the company;

(iv) It can also be used to provide for the premium payable on the redemption of any redeemable Preference Shares or of any debentures of the company;

(v) It can also be used to purchase its own shares (buy-back).