Which of the following types of issue of shares is allowed to a company?
(A) Issue of shares of Face Value Rs. 10 at Rs. 11 by Initial Public Offer
(B) Issue of shares of Face Value Rs. 10 at Rs. 10 by Initial Public Offer
(C) Issue of shares of Face Value Rs. 10 at Rs. 9 by Initial Public Offer
(D) Issue of shares of Face Value Rs. 10 at Rs. 9 to its employees
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B), and (D) only
A company may issue shares at par (at face value) or at a premium (above face value). It cannot ordinarily issue shares at a discount; under the Companies Act, 2013 the exception is sweat equity shares, which are issued to the company's own employees or directors.
(A) Issue of shares of Face Value Rs. 10 at Rs. 11 by Initial Public Offer Correct. This is an issue at a premium of Re. 1 per share. A premium issue is allowed, and the premium is credited to the Securities Premium Reserve Account.
(B) Issue of shares of Face Value Rs. 10 at Rs. 10 by Initial Public Offer Correct. This is an issue at par, the ordinary case. The company receives the full face value.
(C) Issue of shares of Face Value Rs. 10 at Rs. 9 by Initial Public Offer Incorrect. This is an issue at a discount to the public, which a company cannot make. An initial public offer is not the case where a discount is allowed.
(D) Issue of shares of Face Value Rs. 10 at Rs. 9 to its employees Correct. Shares issued to employees at a discount are sweat equity shares, the exception where a discount is allowed, subject to the conditions laid down for them.
NCERT (2026-27 edition): |