Amount of securities premium reserve can …

According to the Companies Act 2013, there are some laws about the utilization of the Securities Premium Account. It states the specific purposes for which this balance may be used. So the account can only be used for such specific purposes and no other purpose.

To issue fully paid-up bonus shares to its existing shareholders. However, you cannot exceed the limit of the unissued share capital of the company.

Securities premium Account can be used for writing off any preliminary expenses of the company.

To write off expenses of issue of shares and debentures, such as commission paid or discount given on the issue of shares.

The balance can also be used to provide for the premium that is payable on the redemption of debentures or of preference shares of the company.

And finally, it can be utilized by the company to buy back its own shares.

The amount of securities premium can be utilised for the following purposes:

1) For writing-off the preliminary expenses of the company.

2) For writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

3) For paying up the premium payable on redemption of redeemable preference shares or debentures of the company.