Can an Indian company issue shares at discount?

(1) Except as provided in section 54, a company shall not issue shares at a discount. (2) Any share issued by a company at a discounted price shall be void.

Can a company issue shares at discount?

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.

Which type of shares can be issued at discount?

Also, debentures and bonds are allowed to be issued at discount as only shares apart from sweat equity shares is allowed for discount.

Why is the issuing of shares at discount illegal?

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. … So never think of discounted price.

Which shares Cannot be issued at a discount?

A company cannot issue shares at a discount because the loss due to the discounted price is barely managed by any company.

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Can a company issue shares at premium?

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. If shares do not have a par value, then there is no premium. …

Under which condition company can issue shares at discount?

Issue of shares at a discount

The issue at a discount is authorized by a resolution passed by the company in the general meeting & sanctioned by the company law board. The maximum rate of discount must not exceed 10% or such rate as the company law board may permit.

Can be issued at discount?

It clearly prohibits the issue of shares at discount as it states in its clause (2) that any share (which means either equity share or preference share) issued by a company at a discounted price shall be void.

When shares are issued at par premium and discount?

When shares are issued at a price equal to their face value it is termed as shares issued at par. When issue price of a share is more than its face value, it is known as shares issued at a premium. If issue price of a share is less than its face value, it is called as shares issued at a discount.

Who can issue bonus shares?

1) Bonus shares can be issued by a company only if the Articles of Association of the company authorizes a bonus issue. Where there is no provision in this regard in the articles, they must be amended by passing special resolution act at the general meeting of the company.

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What is discount share?

These are the stocks issued in the market to be sold for less than its nominal value or par value. It also refers to selling shares below the fair market value. The company charter states the par value. …

Can shares be issued below face value?

Accordingly, no company can issue share below the nominal value except Sweat Equity Shares even if the market value of the share is below the nominal value of the share.

Can a company issue shares at discount under Companies Act 2013?

The Section 53 of the amended Companies Bill states, “a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme.” Earlier provision under Section 53 of Companies Act 2013 said, “Any share issued by a …

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