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%.
Conditions for Issue of Shares at Discount
There is a cap on the rate of discount. A company cannot issue any shares at more than 10% discount. The company should issue the shares within 60 days of receiving permission from the relevant authority.
(1) A company shall not issue shares at a discount except as provided in this section. … (iv) the shares to be issued at a discount are issued within two months after the date on which the issue is sanctioned by the 3 Company Law Board] or within such extended time as the 3 Company Law Board] may allow.
As per companies Act 2013, a company shall not issue shares at a discount except as provided in section 54 for issue of sweat equity shares. Any share issued by a company at a discounted price shall be void.
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. Not less than 1 year has at the date of issue elapsed since the date on which the company became entitled to commence business.
Correct answer is (C) Issued as sweat equity.
Section 53 of Companies Act, 2013 – Prohibition on Issue of Shares at Discount. (1) Except as provided in section 54, a company shall not issue shares at a discount.
Section 53 of the Companies Act, 2013: Prohibition on issue of shares at discount.
Often Shares are issued at Premium. … Discounted prices may be offered when company is not able to pay its debts and offering it share to its creditors. Company Act 2013 strictly prohibited the companies to issue shares at discounted price. It invites penalty and imprisonment for directors.
When shares are issued against the purchase price, it is called ‘Issue of shares for consideration other than cash’. … In other words cash is not received by the company against such shares. In this case shares are not issued to the public in general.
Under what circumstances a company would issue its securities at premium and discount?
A company issues its shares at a premium when the price at which it sells the shares is higher than their par value. This is quite common, since the par value is typically set at a minimal value, such as $0.01 per share. The amount of the premium is the difference between the par value and the selling price.