Which of these types of companies cannot issue shares at discount?
Which of these types of companies cannot issue shares at discount?
The correct option is D New company.
Issue
of shares at discount means issuing shares at price less than par value.
Conditions
to Issue Share at Discount:
Shares
can be issued at discount subject to the following conditions:
(a) The shares must
belong to a class already issued.
(b) Discount rate
should not be more than 10%.
(c) One year must have
passed since the date at which the company was allowed to commence business.
(d) The issue of such
shares must take place within two months after the date of court’s sanction or
within such extended time as the court may allow.
(e) The issue must be
authorized by a resolution passed by the company in general meeting and
sanctioned by the Company Law Board.
According to condition
(a) to issue share at discount, they must belong to a class already issued and
new company does not have any such kind of shares and hence, new company cannot
issue share at discount.
Issue of shares at discount means issuing shares at price less than par value.
Conditions to Issue Share at Discount:
Shares can be issued at discount subject to the following conditions:
(a) The shares must belong to a class already issued.
(b) Discount rate should not be more than 10%.
(c) One year must have passed since the date at which the company was allowed to commence business.
(d) The issue of such shares must take place within two months after the date of court’s sanction or within such extended time as the court may allow.
(e) The issue must be authorized by a resolution passed by the company in general meeting and sanctioned by the Company Law Board.
According to condition (a) to issue share at discount, they must belong to a class already issued and new company does not have any such kind of shares and hence, new company cannot issue share at discount.
