Question

State, whether the following statements are True or False.

A public company can issue shares at only rate of discount.

Answer 1

False

Explanation: Shares can be issued at a discount by public or private companies, subject to a few conditions (as per Section 79 of Companies Act, 1956) that are mentioned below:

➢ Shares to be issued at a discount must be of an existing class already issued, i.e. a new class of shares cannot be issued at a discount.
➢ Shares issued at a discount must be authorised by the resolution passed in the general meeting of a company and approved by SEBI.
➢ The resolution should specify the maximum rate of discount (not exceeding 10%).
➢ At least one year should have elapsed since the company commenced business.
➢ After the permission of SEBI, the shares to be issued at a discount should be issued within two months.