Share premium account - kept in a separate bank account

[VKS]

Whether share premium amount must be kept in a separate bank account or we can keep it in general bank account where company makes the payment for various day to day expences

--
Thanks and Regards

VKS

COMPANY SECRETARY

BANGALORE

[Vivek Aggarwal]

Dear VKS

Share Premium money must be kept in a separate bank account as it cannot be used for general business purpose of the Company.

 

Regards
CS Vivek Aggarwal

---

From: VKS <sajjanvi...@gmail.com>
To: csmy...@googlegroups.com
Sent: Mon, 17 January, 2011 1:53:52 PM
Subject: [CSMysore] Share premium account - kept in a separate bank account

--
Find eNewsletters of ICSI Mysore at: http://www.icsi.edu/NewsEvents/enewsletters/tabid/1757/Default.aspx AND www.esnips.com/web/icsimysore
 
You received this message as you are subscriber. To unsubscribe email to: csmysore-u...@googlegroups.com

[Kaliappagounder Muthusamy]

Friends,

I feel both the question and the answer is under a wrong notion.

I agree that the share premium could not used for general purpose except for those specified in the law.  It  does not mean that the amount equal to the share premium should be kept in a separate bank account.  If so, do you mean the general reserve or any other reserves should be kept as a cash / bank balance ?

The reserves may in any form either as cash / bank / tintable or intangible assets / current assets etc and not as mentioned by you.

If I am wrong please correct me.

regards

--

K.Muthusamy B.Com,FICWA,FCS

JMACS ASSOCIATES

Company Secretaries in Practice

Lakshya 2nd Floor, 1056/1 Avinashi Raod

Coimbatore-641018

0422-4391973, 0422-4204791

On move: 94433 -71791

[Jayashree Chandrasekaran]

Yes, I agree with Mr.Muthuswamy...

Jayashree

C.JAYASHREE

PARTNER

S.GANESH&ASSOCIATES

CHENNAI

98840 17120

[Chethan Bhat]

Agree with mr. muthhu completely. Usage of share premium for purposes specified by law is only accounting purposes.(credit side of balance sheet). This does not mean cash collected should be locked up in bank account s. The law states you can't debit share premium account for all working capital requirement. There is no restriction on crediting bank account provided debit is under appropriate head.

[VKS]

Hi friends

Thanks for giving me the valuable answer