share premium

share premium
Under the Companies Act 1985, if the amount paid to the company on subscription for the issue of shares is greater than their nominal value, the surplus is called share premium. The aggregate of the share premium is transferred in the company's accounts to an account called the "share premium account". It may be used to pay bonus shares issued to members or in writing-off preliminary expenses or the expenses of a new issue. It can also be used to provide the premium on redemption of debentures.

Easyform Glossary of Law Terms. — UK law terms.


share premium
the excess of the issue price of a share over its nominal value. A company's share premium account exists for certain defined purposes, namely: (i) to issue fully paid bonus shares; (ii) to write off preliminary expenses; (iii) to write off the expenses of, or any discount allowed on, any issue of shares or debentures; (iv) to provide for any premium payable on the redemption of debentures.

Collins dictionary of law. . 2001.

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