Share premium is the credited difference in price between the par value or face value of shares and the total price a company received for recently issued shares. Share premium funds are also commonly used to cover underwriting expenses paid to a financial institution usually an investment bank that assists companies to introduce their new shares to the market or. The funds in the share premium account can be utilized to make a bonus issue of shares to existing shareholders and for share repurchases.
Let us see the two types of shares of a company and the procedure for issue of shares that a company must follow. The process of creating new shares is known as allocation or allotment. Issue of prospectus receiving applications allotment of shares are three basic steps of the procedure of issuing the shares.
When shares of the face value of rupees ten each are issued at price which is greater than rupees ten per share it will be said that the issue is at premium. 19 october 2010 issue of shares at premium issuance of shares at premium is th most prevalent mode of issue by reputed and well established companies. To pay a premium on the redemption of preferred stock.
The excess cash or premium received by the company is place in a shared premium account and can be used to pay up unissued shares for distribution as bonus shares. A term used when a company issues shares of its stock at price above its par value. Issue of shares at premium.
Share premium account may also be known as additional paid in. The share premium account represents the difference between the par value of the shares issued and the subscription or issue price. The amount of the premium is the difference between the par value and the selling price.
A company issues its shares at a premium when the price at which it sells the shares is higher than their par value this is quite common since the par value is typically set at a minimal value such as 0 01 per share. This premium is then credited to the share premium account of the company. The shares are said to be issued at a premium when the issue price of the share is greater than its face value or par value.
Share premium is the difference between the issue price and the par value of the stock and is also known as securities premium.
Issue of shares at premium. Issued 5 00 000 equity shares of rs 10 each at a premium of rs 2 per share the terms of payment per share were as follows. Rs 3 with application. Rs 4 on allotment. Rs 5 on first and final call.
The issue was fully subscribed. The call was also duly made. All moneys were received in time. Issue of shares at premium.
The issue of shares at premium refers to the issue of shares at a price higher than the face value of the share. In other words the premium is the amount over and above the face value of a share. Usually the companies that are financially strong well managed and have a good reputation in the market issue their shares at a premium.
Usually the companies that are financially strong well managed and have a good reputation in the market issue their shares at a premium. In other words the premium is the amount over and above the face value of a share. The issue of shares at premium refers to the issue of shares at a price higher than the face value of the share.
Issue of shares at premium. All moneys were received in time. The call was also duly made.
The issue was fully subscribed. Rs 5 on first and final call. Rs 4 on allotment.
Rs 3 with application. Issued 5 00 000 equity shares of rs 10 each at a premium of rs 2 per share the terms of payment per share were as follows.
