What are the provisions regarding issue of 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 discount shall be void.

What does it mean to issue shares at a discount?

That discount means that there is an inherent value in the right to be offered the shares, and the shareholders in a listed company can trade those rights and realise that value if they do not want to take up the shares themselves.

Which shares are issued at discount?

ADVERTISEMENTS: When Shares are issued at a price lower than their face value, they are said to have been issued at a discount. For example, if a share of Rs 100 is issued at Rs 95, then Rs 5 (i.e. Rs 100—95) is the amount of discount. It is a loss to the company.

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.

Can shares be issued at discount in India?

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 discount shall be void.

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Why do we discount shares?

Discount shares are issued at a discount price to incentivize the investors to purchase the stocks. For this purpose, it is common to issue shares at a price below the market value. … In most of the states of the U.S., it is prohibited to sell the shares at a price less than its nominal or par value.

What is issue of shares 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.

Can right shares be issued at discount?

A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date.