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Authorised Share Capital

As per Sectio...

Question

As per Section 52 of the Companies Act 2013, the securities premium reserve can be utilised for the purpose of:

A

Redemption of preference shares

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B

Transfer of amount to capital redemption reserve

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C

Payment of dividend on preference shares

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D

Payment of premium on redemption of preference shares.

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Solution

The correct option is D Payment of premium on redemption of preference shares.
As per companies Act Securities premium can be utilised only for:
(a) issuing fully paid shares to members
(b) writing off the balance of preliminary expenses of the company
(c) writing off commission paid/discount allowed/expenses incurred on issue of shares or debentures of the company
(d) for providing for the premium payable on redemption of preference shares
(e) for purchase of its own shares

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