Under the Companies Act, 2013, which of the following statements regarding the issue of shares at a…
Section 53(1) of the Companies Act, 2013 prohibits a company from issuing shares at a discount except as provided in section 54 (sweat equity shares), and section 53(2)…
Choose your answer
Under the Companies Act, 2013, which of the following statements regarding the issue of shares at a discount are correct?
A. Except as provided in section 54, a company shall not issue shares at a discount
B. Sweat equity shares may be issued at a discount, subject to the conditions laid down in section 54
C. Any share issued by a company at a discounted price in contravention of section 53 is void
D. A company may issue shares at a discount if the issue is authorised by an ordinary resolution and sanctioned by the Tribunal
E. A company may issue shares at a discount to its creditors when its debt is converted into shares under a statutory resolution plan or a debt restructuring scheme in accordance with directions of the Reserve Bank of India
Answer and explanation
Correct answer C
Section 53(1) of the Companies Act, 2013 prohibits a company from issuing shares at a discount except as provided in section 54 (sweat equity shares), and section 53(2) makes any share issued at a discounted price void, so A, B and C are correct. Section 53(2A) permits shares to be issued at a discount to creditors when their debt is converted into shares under a statutory resolution plan (such as a resolution plan under the Insolvency and Bankruptcy Code, 2016) or a debt restructuring scheme under Reserve Bank of India directions, so E is correct. There is no route for issuing shares at a discount by ordinary resolution with Tribunal sanction, so D is wrong (that mechanism existed under s.79 of the Companies Act, 1956). Hence A, B, C and E only.
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