CS Executive · Corporate Accounting and Financial Management · Accounting for Share Capital
Under Section 52 of the Companies Act, 2013, the securities premium account may be applied for which of the following purposes?
The securities premium account may be used for writing off expenses of, or commission paid or discount allowed on, an issue of shares or debentures. Section 52(2) also permits bonus shares, preliminary expenses, redemption premium and buy-back, but not dividends or writing off general losses.
- APaying dividend to equity shareholders
- BWriting off the expenses of or commission paid on any issue of shares or debenturesCorrect
- CWriting off accumulated losses of the company
- DIssuing right shares at a discount
Explanation
Section 52(2) lists permitted uses: fully paid bonus shares, preliminary expenses, expenses, commission or discount on issue of shares or debentures, premium on redemption, and buy-back. Dividend payment and writing off losses are not listed.
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