Q.What do you understand by Issue of Securities at Premium?

Issuing securities at a premium means issuing shares above face value; the excess amount is the securities premium, credited to a special account with restricted uses.

A company issues securities at a premium when the issue price exceeds the face value of the security. For example, a share of face value ₹10 issued at ₹15 carries a premium of ₹5.

Key points:

• The premium amount is credited to a separate Securities Premium Account.
• Well-established, profitable and reputed companies with good goodwill can command a premium.
• The premium is not part of share capital and cannot be distributed as dividend. …