The companies can issue the shares at a discount subject to the following conditions: The issue must be of a class of shares already issued. … The shares to be issued at a discount must be issued within two months of the sanction by the company law board or within such extended time as the company law board may allow.
When can shares be issued at discount?
When shares are issued at a price lower than the face value, they are said to be issued at discount. Thus, the excess of the face value over the issue price is the amount of discount. For example, if a share of ` 10 is issued at Rs. 9 then Rs.
Can a company issue its shares at discount?
There is a cap on the rate of discount. A company cannot issue any shares at more than 10% discount. … The shares must belong to the same class of shares which are already available in the market. For example, if the has previously issued Equity shares then this time also, the company has to issue Equity shares only.
Under which conditions company can issue shares at discount?
A company can issue shares at discount atleast after one year from the date of commencing business. 5. If a company wants to issue shares at discount, then it must issue them within two months of obtaining sanction from the Company Law Tribunal.
Why do companies issue shares at discount?
In the rights issue, the company may choose to issue shares to its existing shareholders instead of resorting to issue of shares to the public. Such shares are issued at a discount given in the market price. It also helps to increase the stake of the existing shareholders. “The basic idea is to raise fresh capital.
Which type of shares are issued at discount?
In the field of investing, “at a discount” refers explicitly to stock that is sold for less than its nominal or par value. The nominal, or par, value for a security, which is detailed in the company charter, is the minimum price that a stock of a particular class can be sold for in an initial public offering (IPO).
Which shares can be sold at discount?
When Shares are issued at a price lower than their face value, they are said to have been issued at a discount. For example, if a share of Rs 100 is issued at Rs 95, then Rs 5 (i.e. Rs 100—95) is the amount of discount. It is a loss to the company.
Can a new company issue shares at premium?
All types of companies can issue their shares at premium. As per the provisions of Section 52 of the Companies Act, 2013 a company can issue shares at a premium, whether for cash or otherwise.
What is maximum permissible discount on reissue of shares?
4 (that is, total money received less premium money received ), therefore, maximum permissible discount which can be allowed at the time of reissue is Rs. 4. (iii) In this case, money received on shares forfeited in respect of capital is Rs. 5, and , therefore, this is the amount of maximum permissible discount.
Which of the following is not required to be prepared under the Companies Act?
Which of the following is not required to be prepared under the companies act 1)balance sheet. 2)report of Directors and Auditors. 3)Funds flow statement. 4)Statement of profit and loss.