discount

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Manoj Kumar Maharana

Manoj Kumar Maharana (Querist)
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22 March 2009 plz help me when a company issue its share at discount rate and why?

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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25 March 2009 issue of share at discountdeals with Section 79. a company may issue at a discount,share of a class already issued, only if all the following conditions are fulfilled :
(a) The issue must have been authorised by a resolution passed by the company in general meeting, and sanctioned by the Company Law Board (CLB).
(b) The said resolution must specify the maximum rate of discount, at which the shares are to be issued. maximum discount rate exceeds 10 per cent unless the CLB is allows ohigher percentage of discount
(c) At the date of issue, not less than one year ought to have passed from the date on which the company was entitled to commence business.
(d) the shares to be issued at a discount have been issued within 2 months after the date of the CLB’s sanction or within the time extended by it.On passing the resolution authorising the said issue, the company may apply to the CLB for its sanction if the CLB thinks it proper to sanction, it may do so on such terms and conditions as it thinks fit.
Every prospectus relating to issue of the shares must contain particulars of the discount allowed on the issue of the shares or so much of that discount as has been written off at the date of the issue of the prospectus