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    Question

    Which of the following is true with respect to issue of shares at a discount?

    A A company cannot issue shares at a discount Correct Answer Incorrect Answer
    B A company may issue shares at a discount to the creditors when its debt is converted into shares Correct Answer Incorrect Answer
    C Issue of shares by a company at a discount is voidable Correct Answer Incorrect Answer
    D Both a & b Correct Answer Incorrect Answer

    Solution

    Section 53. Prohibition on issue of shares at discount- Except as provided in section 54, a company shall not issue shares at a discount, (2) Any share issued by a company at a discount shall be void. (2A) Notwithstanding anything contained in sub-sections (1) and (2), a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.

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