Section 53 Companies Act 2013 prohibits issue of shares at:
Aa premium under any circumstances during the financial year
Ba DISCOUNT (except for sweat equity under Section 54 / discounted issue to creditors under IBC scheme)
Cthe face value of the shares as stated in the MoA of the company
Dany price exceeding the face value as approved by the shareholders by special resolution
Answer & Solution
Correct answer: B. a DISCOUNT (except for sweat equity under Section 54 / discounted issue to creditors under IBC scheme)
1. Section 53(1) Companies Act 2013: 'Except as provided in section 54, a company shall not issue shares at a discount.'
2. Section 54 permits issue of SWEAT EQUITY shares at a discount (or for non-cash consideration) to directors and employees, subject to conditions.
3. The Companies (Amendment) Act, 2017 inserted Section 53(2A) permitting issue of shares at a discount to a creditor when the value of a debt is reduced under a Statutory Resolution Plan/Debt Restructuring Scheme by RBI/IBC.
4. Violation penalty: company and every officer in default — fine ≥ amount raised, up to twice; officers also imprisonment.
5. Hence option B is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 53_
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