CUET Preparation Today
According to the Companies Act, 2013, are there any restrictions on the issuance of debentures at a discount? |
Yes, it is prohibited No, there are no restrictions Yes, but only for certain types of companies It is allowed, but only with prior approval from regulatory authorities |
No, there are no restrictions |
The correct answer is option 2- No, there are no restrictions. When a debenture is issued at a price below its nominal value, it is said to be issued at a discount. For example, the issue of Rs. 100 debentures at Rs. 95, Rs. 5 being the amount of discount. The discount on issue of debentures can be written off either by debiting it to or out of Securities Premium Reserve, if any, during the life time of debentures. Discount on issue of debentures to be written off within 12 months of the balance sheet date or the period of operating cycle is shown under ‘Other Current Assets’ and the part which is to be written off after 12 months of balance sheet is shown under ‘Other Non-Current Assets’. The Companies Act, 2013 does not impose any restrictions upon the issue of debentures at a discount. |
