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Reduction of share Capital-section 100

zankhana Trivedi (Company Secretary) (462 Points)

26 October 2010

Hello,

Please guide me on below given query???

Our Company planning to reduce share captial which is in excess of wants of the Company. The Board has decided to pay Rs. 44.81/- per share to the Sharehodlers. The face value of the Share is Rs. 10/- per share. In our Books of account we have Securities Premium Account. The Number of shares which we are going to reduce is 93,827.

Can we utilize securities premium account to pay off the Sharehodlers..

Can anybody let me know the accouting treatment in the Books of Accounts please.

Thanks & Regards.

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1 Replies

CS Mayur Buha (Company Secretary) (238 Points)
Replied 26 October 2010

Section 78. Application of premiums received on issue of securities

(1) Where a company issues securities at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those securities shall be transferred to an account, to be called "the securities premium account"; and the provisions of this Act relating to the reduction of the securities capital of a company shall, except as provided in this section, apply1[securities] premium account were paid-up securities capital of the company