Custom Search

(112)-THE SHARE PREMIUM

Friday, February 19, 2010

The Share premium

By “premium” is meant the difference between the issue price of the share and its nominal value. When a company is first incorporated the issue price of its shares will probably be the same as their nominal value and so there would be no share premium. If the company does well the market value of its shares will increase, but not the nominal value. The price of any new shares issued will be approximately their market value.

The companies act states that “where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the premiums on those shares shall be transferred to the share premium account”.

A share premium account is an account into which sums received as payment for shares in excess of their nominal value must be placed.

The share premium account cannot be distributed as dividend under any circumstances.

Dodge Ram Headlights

0 comments:

Post a Comment

About Me

My Photo
Management Consultant.
Financial management and business management specialist.
View my complete profile

WELCOME

WELCOME ALL.....................................................,

If you have any problems regarding accounting please comment in this site and let we know SURELLY WE ANSWERED...................................,