Securities Premium - Permitted Utilizations for General Companies Section 52

. Permitted Utilizations for General Companies [Sub-section (2)]

For companies not covered under sub-section (3), the balance in the SPA can strictly be applied only towards the following five purposes:

1. Fully Paid Bonus Shares [Clause (a)]: Issuing unissued shares to existing members as fully paid bonus shares. (Note: It cannot be used to pay up partly paid shares into fully paid shares).
2. Preliminary Expenses [Clause (b)]: Writing off preliminary expenses incurred during company formation.
3. Issue Expenses [Clause (c)]: Writing off expenses incurred, commission paid, or discount allowed on any issue of shares or debentures.
4. Premium on Redemption [Clause (d)]: Providing for premium payable on the redemption of redeemable preference shares or debentures.
5. Buy-Back of Securities [Clause (e)]: Funding the buy-back of the company's own shares or specified securities under Section 68.

3. Restricted Utilizations for Prescribed Class of Companies [Sub-section (3)]

Sub-section (3) acts as a carve-out with a non-obstante clause ("Notwithstanding anything contained in sub-sections (1) and (2)") targeting companies that:

• Belong to a prescribed class, and
• Comply with the Accounting Standards prescribed under Section 133 (specifically companies governed by Ind AS).

For these companies, the permissible uses of the Securities Premium Account are narrowed to only three purposes:

1. Bonus Equity Shares [Clause (a)]: Paying up unissued equity shares to be issued to members as fully paid bonus shares (unlike sub-section (2)(a), this is restricted specifically to equity shares).
2. Issue Expenses on Equity Shares [Clause (b)]: Writing off expenses, underwriting commission, or discount allowed on the issue of equity shares only (expenses relating to debentures or preference shares cannot be written off against the SPA).
3. Buy-Back [Clause (c)]: Buy-back of own shares or other securities under Section 68.

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