Issue share capital on premium more than authorized capital

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2011 Sir Pls explain if a private Company has authorised capital of Rs. 50 Lacs and want to issue shares of Rs. 50 Lacs with Share Permium of Rs. 50 Lacs.

Can the private limited company do so.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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08 September 2011 Yes It can issue. No problems with that. Only the issued capital can not exceed autorized capital. Here both 50 lacs so no problem.

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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10 September 2011 By issuing shares at 100% premium you are not exceeding the Authorised Capital as 50 will go to Share Premium and 50 will go to Share Capital. This is permitted.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2011 Sir, thank you very much for your quick advice. Plz advice how much share premium can a company take on paid up capital

RG - A Helping Hand

RG - A Helping Hand (Expert)
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10 September 2011 Yes it is possible.
Paid up capital is based on the face value of the share. Security premium is not a part of paid up capital. Security premium amount is credited to a separate account called Security premium account.

In law there is no restriction regarding premium amount but the same should be reasonable.

RG