Corporate and Other LawsMCQQuestion 12526 of 300
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Under Section 52(2) of the Companies Act, 2013, which of the following is NOT an authorized application of the Securities Premium Account for companies complying with Section 133 accounting standards?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option A — Payment of cash dividend to equity shareholders

All Options:

  • APayment of cash dividend to equity shareholders ✓
  • BIn paying up unissued shares of the company to be issued to members as fully paid bonus shares
  • CWriting off preliminary expenses of the company
  • DWriting off expenses of, or commission paid on, any issue of shares or debentures

Detailed Solution & Explanation

Correct Answer: Option **A** (Payment of cash dividend to equity shareholders) **Statutory Provision (Section 52 - Application of Premiums Received on Issue of Shares):** Section 52 strictly prohibits using securities premium for payment of dividends. For companies whose financial statements comply with Accounting Standards under Section 133, the premium can only be used for paying up unissued shares as bonus shares, writing off issue expenses/discounts, and buyback under Section 68. Therefore, Option A is the correct legal position under the ICAI curriculum.

More Questions from Corporate and Other Laws

Under Section 77(1) of the Companies Act, 2013, within what initial statutory period must a company register a charge created on its property or assets with the Registrar of Companies (ROC)?

Under Rule 3(3) of the Companies (Acceptance of Deposits) Rules, 2014, what is the maximum aggregate limit of deposits that an eligible public company can accept from its members and the public?

Which of the following is a requirement for a company to buy back its securities under the Companies Act, 2013?

What is the tax treatment of buyback of shares by an unlisted company?

Explain the concept of differential rights and its significance in the context of buyback of securities.

What are the legal provisions governing the buyback of securities by a company in India?

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