13 June 2012
Vide Section 78(2) in The Companies Act, 1956 (2) The share premium account may, notwithstanding anything in sub- section (1), be applied by the company- (a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares; (b) in writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company.
Therefore , utilisation of Share Premium amount for any other purpose would amount to Reduction of Capital.
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