Select the TRUE statement related to the issue/re-issue of equity shares.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Equity Shares can be re-issued at Discount.
As a rule, a company cannot ordinarily issue shares at a discount. The two exceptions are the reissue of forfeited shares and the issue of sweat equity shares. So forfeited equity shares may be reissued below their face value, as long as the discount does not exceed the amount forfeited on them.
Why the other options are incorrect
Option (1) Equity Shares cannot be issued at Discount. — Incorrect. The bar is not absolute: sweat equity shares can be issued at a discount, so a flat “cannot” overstates the rule.
Option (3) Equity Shares cannot be issued at premium. — Incorrect. Shares are freely issued at a premium; the premium is credited to Securities Premium Account.
Option (4) Equity Shares cannot be re-issued at premium. — Incorrect. Forfeited shares may be reissued at par, at a premium or at a discount.
NCERT (2026-27 edition): |