Question

State any three purpose other then 'buy - back of shares' for which securities premium can be utilized.

Answer 1

The companies Act, $1956$ imposes certain restriction on the utilisation of amount received as securities premium. As per the section $78$ of the companies Act of $1956$, the amount of securities premium received can be utilised for several purposes. Three of such purposes are listed below.
i. For issuing fully paid bonus shares.
ii. For writing off the preliminary expenses of the company.
iii. For writing off the expenses of, or the commission paid or the discount allowed on, any issue of shares or debentures of the company.