52. Application of premiums received on issue of shares
(1) Where a company issues shares at a premium, whether for cash or otherwise, a
sum equal to the aggregate amount of the premium received on those shares shall be
transferred to a “securities premium account” and the provisions of this Act relating to
reduction of share capital of a company shall, except as provided in this section, apply as if
the securities premium account were the paid-up share capital of the company.
(2) Notwithstanding anything contained in sub-section (1), the securities premium
account may be applied by the company—
(a) towards the issue of unissued shares of the company to the members of the
company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount allowed on,
any issue of shares or debentures of the company;
(d) in providing for the premium payable on the redemption of any redeemable
preference shares or of any debentures of the company; or
(e) for the purchase of its own shares or other securities under section 68.
(3) The securities premium account may, notwithstanding anything contained in
sub-sections (1) and (2), be applied by such class of companies, as may be prescribed and
whose financial statement comply with the accounting standards prescribed for such class
of companies under section 133,—
(a) in paying up unissued equity shares of the company to be issued to members
of the company as fully paid bonus shares; or
(b) in writing off the expenses of or the commission paid or discount allowed on
any issue of equity shares of the company; or
(c) for the purchase of its own shares or other securities under section 68.