Can securities premium be used as working capital? Give reason in supp

1.	Can securities premium be used as working capital? Give reason in support of your answer.
Answer» Securities premium cannot be used as working capital. According to Section 52 (2) of the Companies Act, 2013, the securities premium can be applied only for the following purposes: (i) Issuing fully paid bonus shares to the members. (ii) Writing-off the preliminary expenses of the company. (iii) Writing-off the expenses on issue of shares, commission paid on any issue of shares or debentures of the company and discount allowed on any issues of shares and debentures. (iv) Providing for the premium payable on the redemption of redeemable preference shares or debentures of the company.

Can securities premium be used as working capital? Give reason in support of your answer.

Answer»

Securities premium cannot be used as working capital.

According to Section 52 (2) of the Companies Act, 2013, the securities premium can be applied only for the following purposes:

(i) Issuing fully paid bonus shares to the members.

(ii) Writing-off the preliminary expenses of the company.

(iii) Writing-off the expenses on issue of shares, commission paid on any issue of shares or debentures of the company and discount allowed on any issues of shares and debentures.

(iv) Providing for the premium payable on the redemption of redeemable preference shares or debentures of the company.

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