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ISSUE OF SHARES AT PREMIUM

09 March 2009

Hello to all friends,

Please suggest me that in case of a private company, can we allot the equity shares having face value of Rs. 10/- only on a premimum of Rs. 1000/- Rs. or Rs 2400/- ?

As per my knowledge, we can satisfy only the requirements of Section 78 regarding creation & transfer of premium amount to share premium account etc.

But actually I want to know that what justification we can give (in our records like board resolutions, minutes etc.) for allotting the shares on such a high premium ?

Is there any cap or limit in this regard? Please suggest at earliest.

Regards

CS SOURABH GUPTA

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10 Replies

Sumit Jain (CA) (4760 Points)
Replied 09 March 2009

there is no limit

on premium

u can issue the shares at any premium

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$AcH!n G (Still Running for My Destination) (1036 Points)
Replied 09 March 2009

yes sumit is right

company law restrict only shares issue at discount not at premium.

SOURABH GUPTA (CS) (100 Points)
Replied 09 March 2009

Thanks for replies

But dear, how can we show our justification for such a high premium, if our company is in losses or low profits and also when company is not doing any major activity.

Should we go as per CCI Guidelines or to take certificate from Statutory Auditor of the Company for premium justification or some other way.

Please suggest further.

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 16 March 2009

yes

there is no such restriction on premium amount u/s 78.

RAJESH (PARTNER) (56 Points)
Replied 30 March 2010

I am adding the issue on above issue.

1) Can a pvt. co issue share at a premium to its Parent Co. who is NRI, where there is first year of Company, profit is vary law?

2) Share valuation as per CCI guidlines is for Fair value or Minium value , above that value co can issue share?

pl. elabrote:

Thanks in Advance

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Sachin (Chartered Accountant) (419 Points)
Replied 30 March 2010

Dear Rajesh,

Please write your problem in detail sothat i can give proper advice. My email id is sachinagarwalcallb @ gmail.com

Rasesh (CS CWA MBA (Fin) B.Com LL.B (Spl)) (6501 Points)
Replied 30 March 2010

Firstly, CCI guidelines are not required to be followed. Secondly, the company should be in a position to justify the premium. If the company has assets (tangible or intangible) or has future earning capacity or the market value ofthe company is high, then the premium can be charged.

It is more from the investors prespective that the premium has to be justified.

kalpana maheshwari (Chartered Accountant) (32 Points)
Replied 04 May 2011

WHY ROC IS ASKING FOR JUSTIFICATION FOR ISSUE OF SHARES AT HIGH PREMIUM IN CASE OF A PVT CO. WHEN THERE IS NO SUCH RESTRICTION AS PER COS. ACT

kalpana maheshwari (Chartered Accountant) (32 Points)
Replied 04 May 2011

WHAT ABOUT PUBLIC LIMITED COMPANIES (UNLISTED) ? CAN THEY ISSUE SHARES AT HIGH PREMIUM? WHETHER ANY JUSTIFICATION REQUIRED?

BRIJESH PRATAP SINGH (MANAGER) (21 Points)
Replied 09 May 2011

Dear Sir

with referenc to the above we r trouble.

my Company 5.00 lacs Authorised Capital in Which have paid up 1.00 capital. but i want to appoint to new director. please give to me as formate boards directors resolution & consent appontee director as director

and

i want share premium issued for max 25.00 lacs upto.

10000- 1. 4500 @ 10.00=45000

2. 4500* @ 10.00=45000

3. 1000 @ 10.00=10000

4. new Director appoint progress=

i thought fistly all of one

i do appoint new director . then i want 32 filed pleaase give formate above

this is processor

share premium

1. 4500+ 22500 @ Rs.60(10+50) = 13,95,000.00

2. 4500+ 5500 @ Rs. 60(10+50)= 3,75,000.00