The securities premium collected by the company can be utilised only for the purposes specified u/s 78 of the companies act, 1956........
My question is if the the company in its general body meeting sanctions that the amt can be used for any other purpose to which the Company Law Tribunal also gives its sanction, then can the amt of securities premium be utilised for that purpose not mentioned in sec 78? Please reply........
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 02 October 2009
The usage of the SECURITIES PREMIUM is specifeid by the COMPANIES ACT, 1956....
And so, u can't ask for a permission or sanctions things.. And i dnt think,, government permit that too.. So according to me, its not possible,,
But let c, wat other members say..
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 02 October 2009
neither any resolution (special or otherwise) or any order or sanction, of any authority nor Board , can go beyond the Act itself.
The Harshit Aggarwal
(B.Com(H) ,CS Final)
(5278 Points)
Replied 02 October 2009
hi Poonam,
though the matter is beyound my level and Mr. Dheeraj & Manmohan may be correct but in your question u said that Company Law Tribunal also gives its sanction then what is the problem, i think NO ONE CAN STOP U.
Pravin
(Associate)
(127 Points)
Replied 03 October 2009
Hi,
If Sec. Premium apply for any purpose other than mentioned in Section 78 (2), the procedure of reduction of share capital has to be followed
The court has discretion whether or not to confirm a reduction in Sec. premium account and would normally do so where a. the shareholders are treated equally b) the reduction proposals are properly explained c) the creditors are safeguarded d) the reduction is for a discernible purpose.
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 03 October 2009
| Originally posted by :Pravin | ||
| " | Hi, If Sec. Premium apply for any purpose other than mentioned in Section 78 (2), the procedure of reduction of share capital has to be followed The court has discretion whether or not to confirm a reduction in Sec. premium account and would normally do so where a. the shareholders are treated equally b) the reduction proposals are properly explained c) the creditors are safeguarded d) the reduction is for a discernible purpose. |
" |
I agree , with Pavin,
but what does CLB has to do with reduction in capital
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 03 October 2009
Yes... definately..
I mean, CLB has nothing to do...
And Mr. Harsh*t, u r correct that if Company Law Tribunal has gt no problem than why it can't b.. But its not about ALLOWING ONE COMPANY..... If it started once, then i think every company wud like to utilise securities premium for the purpose they want... Laws and Sactions are made to restrict and not to modify and permit... So, its not about allowing particular company but then have to deal with other companies too...
And then too,, i dnt say i may b cent percent perfect... But then, i want some genuine answer or reply if one thinks that its allowed
The Harshit Aggarwal
(B.Com(H) ,CS Final)
(5278 Points)
Replied 04 October 2009
thanx 4 info. Mr.Dheeraj......
CAclubindia
