cud anybody explain to me sec 78 2a of the companies act?
Mitali Agarwal
(Company Secretary)
(638 Points)
Replied 29 June 2010
Section 78 (2) lays down the purposes for which the amount of securities premium can be utilised by the company.
78 (2) (a) - It provides that Amount in the Securities premium account of the company can be utilised for issue of bonus shares of the company. Since no amount is reqd. to be paid by the shareholders for bonus shares that's why they are issued out of securities premium amount.
And Guidelines for bonus issue have to be certainly followed.
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