Can shares be issued at a discount?

When shares are issued at a price lower than the face value, they are said to be issued at discount. … As per companies Act 2013, a company shall not issue shares at a discount except as provided in section 54 for issue of sweat equity shares. Any share issued by a company at a discounted price shall be void.

Can shares be issued at discount as per Companies Act 2013?

Section 53 of Companies Act, 2013 – Prohibition on Issue of Shares at Discount. (1) Except as provided in section 54, a company shall not issue shares at a discount.

What type of shares can be issued at discount?


It clearly prohibits the issue of shares at discount as it states in its clause (2) that any share (which means either equity share or preference share) issued by a company at a discounted price shall be void.

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Why shares can not issued at discount?

Often Shares are issued at Premium. … Discounted prices may be offered when company is not able to pay its debts and offering it share to its creditors. Company Act 2013 strictly prohibited the companies to issue shares at discounted price. It invites penalty and imprisonment for directors.

Why shares are listed at discount?

A stock typically gets a good listing if the response of all the 3 segments of the IPO investors; retail, non-institutional and QIB to be robust. … Aggressive pricing of the IPO This is one of the most common reasons for an IPO listing at a discount to the issue price.

Can shares be issued at discount for consideration other than cash?

When shares are issued against the purchase price, it is called ‘Issue of shares for consideration other than cash’. … In other words cash is not received by the company against such shares. In this case shares are not issued to the public in general.

Who issue shares on discount means?

ADVERTISEMENTS: When Shares are issued at a price lower than their face value, they are said to have been issued at a discount. For example, if a share of Rs 100 is issued at Rs 95, then Rs 5 (i.e. Rs 100—95) is the amount of discount. … It is debited to separate account called ‘Discount on Issue of Share’ Account.

Can shares be issued at a premium and at a discount?

A company can issue its shares either at par, at a premium or even at a discount. … Shares sold at a premium cost more than their nominal value, and the amount in excess of the face value is the premium. And of course, shares sold at discount cost less than the face/nominal value.

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What is share discount?

Definition: A discount on stock occurs when the stock’s par value is higher than the issuing price. The difference between the greater par value and the lesser issue price is considered the discount. This represents the amount of the par value that investors were unwilling to pay for when the stock was issued.

Which shares Cannot be issued?

Equity shares cannot be issued for the purpose of distribution of dividend.

Can a company issue shares at discount what conditions must a company comply with before the issue of such shares?

1. A company can issue shares at discount provided it has previously issued such type of shares. 2. The issue of shares at a discount is authorised by a resolution passed by the company in the General Meeting and sanction obtained from the Company Law Tribunal.

How do you know if a stock is trading at a discount?

If the price of the bond in the market is lower than $1,000, it is said to be trading at a discount. A discount bond may be contrasted with a bond trading at a premium, where the market price is above its face.

How do you know if a stock is at a discount?

Look for stocks with a low price/earnings (P/E) ratio. A P/E ratio compares the current price of the stock with the earnings made from each share. A low ratio indicates a cheaper stock. Many stock trading websites will list the P/E ratio.

What is the discount given at the time of sale of shares?

There is a cap on the rate of discount. A company cannot issue any shares at more than 10% discount. … The shares must belong to the same class of shares which are already available in the market. For example, if the has previously issued Equity shares then this time also, the company has to issue Equity shares only.

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