A company may issue fresh shares : (A) At discount(B) As Collateral S…

A company may issue fresh shares :

(A) At discount
(B) As Collateral Security
(C) At Par
(D) For Consideration other than cash
(E) At Premium

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (D) and (E) Only

(A) At discount — not allowed: a company cannot ordinarily issue fresh shares at a discount (only sweat equity shares, and reissue of forfeited shares).

(B) As Collateral Security — not allowed: it is debentures, not shares, that are issued as collateral security for a loan.

(C) At Par — allowed: issue price equal to the face value.

(D) For Consideration other than cash — allowed: fully paid shares may be issued to vendors for assets bought.

(E) At Premium — allowed: issue price above the face value.

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.”

NCERT (2026-27 edition):
Issue of Shares at a Discount – “… 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.”

NCERT (2026-27 edition):
Issue of Shares for Consideration other than Cash – “There are instances where a company enters into an arrangement with the vendors from whom it has purchased assets, whereby the latter agrees to accept, the payment in the form of fully paid shares of the company issued to them.”

NCERT (2026-27 edition):
Issue of Debentures as a Collateral Security – “… In such situation, the company may issue its own debentures to the lenders in addition to some other assets already pledged. Such an issue of debentures is known as ‘Debentures issued as Collateral Security’.”