What is the maximum limit of Security premium on which equity shares can be issued by a Pvt. Ltd. Company???Please mention section also??
2 Replies
Shubham Agarwal
(Article Assistant)
(135 Points)
Replied 11 April 2013
i think there is no maximum limit of Security Premium under companies Act, however as per income tax if a company issue share at a premium which is not the prevailing market rate or excess premium over market rate then excess premium is chargeable to income tax as per section 56
Pavan Zavar
(NA)
(57 Points)
Replied 14 April 2013
Generally there is no upper limit of premium amount un der Companies Act.
However no one should decide premium abnormally high than "Value" of its Shares. Generally idepentant valuation is required from CA, who will hardly issue any certificate with abnormally high priced value of your shares to support such high premium amount. Further it is hard for prudent investor to accept shares at such premium price...!
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