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Issue of shares on premium

Law Aspire (CS) (755 Points)

27 April 2017

What is the reason for issuing shares on Premium .

For example Sometimes the Company has Nominal value of each share as 10 and issue at a Premium of Rs. 990. What is the benefit to Company
If the Company issue share at a face value of Rs. 1000/- and not at premium then what will be the difference?

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1 Replies

Ankur Agarwal (2 Points)
Replied 27 April 2017

premium and discount comes from the idea demand for the shares. The face value is what it is when the shares were introduced in the market. but with the changing demand and supply situations . The market value of a share might increase or decrease . Here then the concept of premium. That even though the face value is 10 but if now the market value of such share is 1000 the issue will be for 1000