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:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → B, D, E only
The use of the Securities Premium Reserve is restricted by law to a short list of purposes. Of the five given, three are on that list: writing off preliminary expenses (B), paying premium on redemption of debentures or preference shares (D) and buy-back of shares (E).
(A) Returning excess application money is a refund to applicants from the money received; it is not a use of the reserve.
(C) Bonus shares may be issued from the reserve only as fully paid shares, never as partly paid shares.
NCERT (2026-27 edition):
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