What is the meaning of issue of shares at premium?

What is meant by issue of shares at premium and at discount?

A company can issue its shares at their face value. When company issues its shares at their face value, the shares are said to have been issued at par. Company can also issue its shares at more than or less than its face value i.e, at ‘Premium’ or at ‘Discount’ respectively.

Where is premium on issue of shares?

The premium amount or the amount in excess of par value which is obtained by issuing of shares is credited to a separate account and that account is called as the securities premium account. It is shown under the head Reserves and Surplus on the liabilities side of a company’s balance sheet.

What do you mean by share premium?

Share premium can be thought of as the difference between the par value of a company’s shares and the total amount of money a company receives for shares recently issued.

What is meant by issue of shares at discount give an example?

The issue of shares at a discount means the issue of the shares at a price less than the face value of the share. For example, if a company issues share of Rs. 100 at Rs. 90, then Rs. 10 (i.e. Rs 100—90) is the amount of discount.

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What is meant by issue of shares at discount?

When a company issues its shares at a price lower than the face value of the share, then it is known as the issue of shares at discount. For example, if the face value of a share is Rs. 200 and the company issues it at Rs. 180, then the difference of Rs. 20 (i.e., Rs.

Can company issue 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.

Can right shares be issued at premium?

Can shares be issued at a premium/discount? Reply: The Company can issue new share issues at face value or at a premium. There are no regulations for determining the amount of premium for the issue of shares. The company cannot issue shares at a discount except for sweat equity shares.

How do you solve share premium?

Another way to calculate the share premium can be:

  1. The share premium per share = $15 – $10 = $5.
  2. So total share premium is $5*500 = $2500.

What type of shares can be issued at discount?

Sweat equity shares means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions.