Q.The Securities Premium Account of a company can be utilised for:

Securities Premium is a capital receipt, not trading profit, so the Companies Act restricts it to a specific, limited list of uses.

Option (b) is correct. Section 52(2) of the Companies Act, 2013 permits the Securities Premium Account to be applied only for specific purposes: issuing fully paid bonus shares, writing off the company's preliminary expenses, writing off the expenses of (or commission/discount on) an issue of shares or debentures, providing for the premium payable on redemption of preference shares/debentures, and buying back shares under Section 68. Writing off preliminary expenses is squarely on this list. Option (a) is wrong: paying a dividend out of Securities Premium would distribute what is really a capital receipt as if it were revenue profit, which the Act does not permit. Option (c) is wrong: routine office/administrative expenses are ordinary revenue expenses, met out of normal trading income, not out of a capital reserve like Securities Premium. Option (d) is wrong: a cash bonus to directors is not on the Section 52(2) list at all.

Treating Securities Premium as if it were ordinary distributable profit available for dividend or any company expense, instead of recognising it as a capital receipt restricted to the Section 52(2) list.