Frequent question: What are the conditions for issuing shares at discount?

What are the conditions for the issue of shares at discount?

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.

When can shares be issued at a discount?

(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.

Why are shares not issued at discounts?

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.

Why are shares offered at a discount?

Rights issue at discount

Such shares are issued at a discount given in the market price. It also helps to increase the stake of the existing shareholders. “The basic idea is to raise fresh capital.

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Can a company issue shares to public at a discount Why?

(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 1[discount] shall be void.

What is share discount?

A share discount occurs when the market value of a share falls below its par value. The par or nominal value of a share is an arbitrary figure which is set when a share is first sold or issued. It usually has little or no significance because shares usually trade far above par value. …

Which of the following situation Companies Act 2013 allows for issue of shares at discount?

Correct answer is (C) Issued as sweat equity.

Can a company offer shares at a discount?

Share values

And it is an absolute rule that a share cannot be issued fully paid for anything less than its nominal value – that is, it cannot be issued at a discount.