Question : The sum obtained as a premium on securities cannot be used for the following, according to Section 52(2) of the Companies Act, 2013:
Option 1: Writing off preliminary Expenses
Option 2: Buy back of its own shares
Option 3: Purchase of Fixed Assets
Option 4: Premium Payable on Redemption of Prefrence share
Correct Answer: Purchase of Fixed Assets
Solution :
Following are the uses of the Securities Premium Reserve according to the Companies Act, 2013:
(i) To issue fully paid up bonus shares.
(ii) For writing off the preliminary expenses of the company.
(iii) For writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.
(iv) For paying up the premium that is to be payable on redemption of preference shares or debentures of the company.
(v) To buy back its own shares.
Hence the correct answer is option 3.
