When can a company issue shares at a discount?

Issue of shares at a discount The companies can issue the shares at a discount subject to the following conditions: The issue must be of a class of shares already issued. Not less than 1 year has at the date of issue elapsed since the date on which the company became entitled to commence business.Click to see full answer. Hereof, what type of shares can be issued at discount?When Shares are issued at a price lower than their face value, they are said to have been issued at a discount. For example, if a share of Rs 100 is issued at Rs 95, then Rs 5 (i.e. Rs 100—95) is the amount of discount. It is a loss to the company.Additionally, why are shares not issued at discounts? This is allowed as per companies act. However, the companies with weak fundamentals can’t simply offer discount to attract the shareholders to buy their shares. Hence, the companies act simply prohibits the issue of shares at discount. This is to protect the interest of shareholders. Also question is, can shares be issued at discount as per Companies Act 2013? Company Act 2013 strictly prohibited the companies to issue shares at discounted price. It invites penalty and imprisonment for directors. Section 53 levies penalty equal to the amount raised by the issue of shares at a discount or Rs. 5 lakh, whichever is lower.Can equity shares be issued at discount? Conditions for Issue of Shares at Discount A company cannot issue any shares at more than 10% discount. The shares must belong to the same class of shares which are already available in the market. For example, if the has previously issued Equity shares then this time also, the company has to issue Equity shares only.

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