Redemption

[Ashok Kumar]

Dear all,

 

can the Equity Share Premium amount use for Redemption of Preference Shares.
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Regards

ASHOK KUMAR R

 

 

[Shrinivas hegde]

Dear Ashok,

As per sec 78 (2)( d) of companies act 1956 equity share premium amount can be used for redemption of preference share.

if i'm wrong correct me. 

Shrinivas

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Date: Wed, 22 Feb 2012 15:18:21 +0530
Subject: [CSMysore] Redemption
From: ashok...@gmail.com
To: csmy...@googlegroups.com; csch...@googlegroups.com; company-secre...@googlegroups.com

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[ACS Poonam Jain]

Hi.

 

Sec 78(2)(d) indicates that  the securities premium account be applied by the company in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company.

 

Please check whether the same can be used for the redemption of preference share.

Regards,

poonam.

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Regards

Poonam.

[Neha Gore]

 

The securities account can be used only for the following purposes

a)      issuing fully paid up bonus shares

b)      writing off preliminary expenses

c)      write off commission paid or discount allowed on issue of shares or debentures of the company

d)      providing for premium payable on redemption of any redeemable preference shares or debentures of the company (section 78(2))

the account can also be used for buy back of shares (section 77A(1)(ii)

The account cannot be used for any other purpose, hence Equity share primium can not be used for redemption of preference shares

Regards

Neha

[ramela rangasamy]

As per sec 78 (2)( d) of companies act 1956. it can be applied for repayment of premium payable on the redeemable preference shares.

R.Ramela

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From: Shrinivas hegde <nivas...@live.com>
To: csmy...@googlegroups.com
Sent: Wednesday, 22 February 2012 3:31 PM
Subject: RE: [CSMysore] Redemption

[Anantha Subramanian]

Hi,

As the Act has expressly mentioned the word "Premium Payable" it is clearly prohibiting the company to redeem the preference share but any premium to be paid for redemption could be made with the securities premium.

When I referred Ramaiya for the said section 78 (2), it clearly states that any other purpose than mentioned in the same section would be deemed as a reduction in share capital under section 100 and other relevant sections.

Hence my opinion is that the Securities premium amount could not be straight away used for redemption of preference share but premium on such redemption alone could be paid.

Regards
Ananth

[saurabh chakravorty]

Nahi..................

ASHOK KUMAR R