premium on issue of security retained as
Answers
Answer:
The object of Section 78 of the 1956 Act was to lay down specifically how the securitiespremium accounts collected on the issue of shares should be utilized. The expression “premium” is not defined. It may be that if, over and above the cash payment on the shares, some further advantage measurable in terms of money is conferred on the company the value of such advantage will have to be regarded, as in the nature of a securities premium. Acompany is not bound to issue shares at a premium. Issue of shares at par even when premium could have been realized cannot be said to have been done at the cost of the company’s capital. A company proposed to issue further shares under section 81 of the 1956 Act and offer them at a securities premium. A preference shareholder filed a suit for a declaration that the company was a public company. The issue raised was placed before the management of the company because of an interim order passed in the suit. The equity shareholder with majority shareholding opposed the proposed issue of shares during pendency of suit. The court found that the valuation of shares was not shown to be artificial or exaggerated. The court said that the equity shareholder could subscribe to such share to maintain its holding. The issue of shares at a premium was not illegal.
please make me brainlist yll❤