Consumer Behaviour on Thomas Cook India

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Issue of Shares at a Premium It is quite common for the shares of financially strong and well-managed companies to be issued at a premium, i.e. at an amount more than the nominal or par value of shares. Thus, when a share of the nominal value of Rs. 100 is issued at Rs. 105, it is said to have been issued at a premium of 5 percent. When the issue of shares is at a premium, the amount of share premium may technically be called at any stage of the issue of shares. However, premium is generally called with the amount due on allotment of shares, sometimes with the application money and rarely with the call money. The premium amount is credited to a separate account called ‘Securities Premium Account’ and is shown on the liabilities side of the company’s balance sheet under the heading ‘Reserves and Surpluses’. Share Premium amount can be used only for the following four purposes as laid down by Section 78 of The Companies Act 1956: (a) to issue fully paid bonus shares to an extent not exceeding unissued share capital of the company; (b) to write-off preliminary expenses of the company;

(c) to write-off the expenses of, or commission paid, or discount allowed on any of the shares or debentures of the company; and (d) to pay premium on the redemption of preference shares or debentures of the company. Issue of Shares at a Discount

There are instances when the shares of a company are issued at a discount, i.e. at an amount less than the nominal or par value of shares, the difference between the nominal value and issue price presenting discount on the issue of shares. For example, when a share of the nominal value of Rs. 100 is issued at Rs. 98, it is said to have been issued at a discount of two percent. As a general rule, a company cannot normally issue shares at a discount. It can do so only in cases such as ‘reissue of forfeited shares’ and in accordance with the provisions of section 79 of The Companies Act. It states that, a company is permitted...
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