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Securities Premium amount under Companies Act 2013 can be used for
ADistributing dividends (typical) (typical) (typical) (typical) (typical)
BIssuing fully paid bonus shares, writing off preliminary expenses, share buy-back
CBuying personal assets of directors (typical) (typical) (typical)
DPaying tax penalties (typical) (typical) (typical) (typical) (typical)
Answer & Solution
Correct answer: B. Issuing fully paid bonus shares, writing off preliminary expenses, share buy-back
1. Section 52 restricts the use of Securities Premium to specified purposes.
2. These include issuing fully paid bonus shares, writing off preliminary expenses or share-issue expenses, paying premium on redemption of debentures/preference shares, and buy-back under Section 68.
3. It cannot be used for general dividend or personal items.
4. Hence (B) is correct.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 8 "Company Accounts - Issue of Shares", §8.2 ¶§8.2_
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