Securities premium reserve can be utilised..............

A. to return excess money received on application
B. to write off preliminary expenses
C. to issue partly paid bonus shares
D. for premium paid on redemption of debentures or preference shares
E. for buy back of shares

Choose the correct answer from the options given below:

B, D, E only

The correct answer is option 4- B, D, E only.

When the issue of shares is at a premium, the amount of premium may technically be called at any stage of the issue of shares. However, premium is generally called with the amount due on allotment, sometimes with the application money and rarely with the call money. The premium amount is credited to a separate account called ‘Securities Premium Account’ and is shown under the title ‘Equity and Liabilities’ of the company’s balance sheet under the head ‘Reserves and Surpluses’. It can be used only for the following five purposes:

(a) to issue fully paid bonus shares to the extent not exceeding unissued share capital of the company.
(b) to write-off preliminary expenses of the company.
(c) to write-off the expenses of, or commission paid, or discount allowed on any securities of the company
(d) to pay premium on the redemption of preference shares or debentures of the company.
(e) Purchase of its own shares (i.e., buy back of shares)