The correct answer is Option (3) → A, B and C only
A company may receive payment for its shares in cash or in some other form, and the price may equal or exceed the face value. A price below the face value is allowed only in a few special cases.
A. For cash Correct. Cash is the usual way of issuing shares to the public.
B. Either at par or at a premium Correct. A share issued at its nominal value is issued at par; one issued above it is issued at a premium, the excess being the premium.
C. For consideration other than cash Correct. When the company buys a business or assets, the vendors can be paid in fully paid shares instead of cash.
D. At discount Incorrect. As a general rule a company cannot issue shares at a discount; it may do so only on the reissue of forfeited shares and for sweat equity shares, not on an ordinary issue to the public.
NCERT (2026-27 edition):
Summary – “… Share Capital of a company is collected by issuing shares to either a select group of persons through the route of private placements and/or offered to the public for subscription. Thus, the issue of shares is basic to the capital of a company. Shares are issued either for cash or for consideration other than cash, the former being more common. Shares are said to be issued for consideration other than cash when a company purchases business, or some asset/assets, and the vendors have agreed to receive payment in the form of fully paid shares of a company.” NCERT (2026-27 edition):
Issue of Shares – “… Shares of a company are issued either at par or at a premium. Shares are to be issued at par when their issue price is exactly equal to their nominal value according to the terms and conditions of issue. When the shares of a company are issued more than its nominal value (face value), the excess amount is called premium.” NCERT (2026-27 edition):
Issue of Shares at a Discount – “There are instances when the shares of a company are issued at a discount, i.e. at an amount less than the nominal or par value of shares, the difference between the nominal value and issue price representing discount on the issue of shares. For example, when a share of the nominal value of Rs. 100 is issued at Rs. 98, it is said to have been issued at a discount of two per cent. As a general rule, a company cannot ordinarily issue shares at a discount. It can do so only in cases such as ‘reissue of forfeited shares’ (to be discussed later) and issue of sweat equity shares.” |
