— Kishore V, SME and ACW at Edumarz
Section 78 of the Companies Act 1956 states that the securities premium account can only be used for the following four purposes:
I) To issue fully paid bonus shares up to the amount of the company’s unissued share capital.
(ii) To deduct the company’s preparatory costs.
(iii) To deduct expenditures, commissions paid, or discounts granted on any of the company’s shares or debentures.
(iv) To pay a premium on the company’s preference shares or debentures that are being redeemed.