Question

Securities Premium Account can be used only for the following purposes: (A) To issue partly paid bonus shares to the extent not exceeding unissued share capital of the company;
(B) Buy back of own shares.
(C) To write-off the expenses of, or commission paid, or discount allowed on any securities of the company;
(D) To pay premium on the redemption of preference shares or debentures of the company.
Choose the correct answer from the options given below:

• A. (A), (B) and (D) only
• B. (A), (B) and (C) only
• C. (A), (B), (C) and (D)
• D. (B), (C) and (D) only

Hint:

Securities Premium can never be used for paying dividends or partly paid bonus shares.

Answer 1

The Correct Option is D

Step 1: Legal Basis.
Section 52 of the Companies Act, 2013, specifies the permitted uses of the Securities Premium Account. These include: - Issuance of fully paid bonus shares. - Amortization of preliminary expenses, commission, or discount on issue. - Payment of premium on redemption of preference shares or debentures. - Buy-back of the company's own shares.

Step 2: Evaluation of Options.
(A) Issuance of partly paid bonus shares → Invalid (only fully paid bonus shares are legally permissible).
(B) Buy-back of own shares → Valid.
(C) Write-off of expenses, commission, or discount → Valid.
(D) Payment of premium on redemption → Valid.

Step 3: Determination.
Accordingly, the valid options are (B), (C), and (D).

Final Determination: \[\boxed{(B), (C) \text{ and } (D) \text{ only}}\]