Can we issue shares at less than face value?

Can we issue shares at less than face value?

No, it will not issue below the face value. However, if the companies performance is bad, the share holders will dump that company and it will trade below the face value. Let us Rcom for example, the face value is 5 rupees and trading at 1.90 rupees.

Can company issue shares at less than fair value?

Hence under this provision, any excess premium received by a private limited company on issuance of equity shares is taxed in the hands of the Company (Investee Company). This provision is wide enough to cover any assets procured by any person at value lower than the fair market value of such assets.

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Can a company issue shares at face value?

Yes you can issue shares at face value and there won’t be any issue.

When a company issue shares at a price less than their face value is called?

Issue of shares at discount: When the shares are issued at a price lower than the face value, they are said to be issued at discount.

Can a company issue shares having face value of 10 at 8?

No. Under Section 53 of the Companies Act, 2013, a Company cannot issue shares at discount.

Can a company issue shares more than fair value?

Provisions of Section 56(2)(viib) says that when a private limited company issues share at a price which is more than its Face Value then consideration receives in excess of Fair Market Value (FMV) is taxable under the head “Income From Other Source”.

Can a new company issue shares at premium?

Section 56 of the Income Tax Act prescribes issuance of shares at fair value. All types of companies can issue their shares at premium. Shares at a premium at the time of incorporation. As per the provisions of Section 52 of the Companies Act, 2013 a company can issue shares at a premium, whether for cash or otherwise.

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Why do companies issue no par value shares?

When a company has no par value stock, there is effectively no minimum baseline from which to price the stock, so the price is instead determined by the amount that investors are willing to pay, based on their perceived value of the issuing entity; this may be based on a number of factors, such as cash flows, the …

Can a private limited company issue shares at face value?

In my view, the issue of further shares by a private limited company at a price lower than the fair market value of the shares shall be subject to taxation in the hands of the recipient as per the provisions of Sec.56 (2) (vii) (c) of the Income Tax Act, 1961. However, there is no bar on issue of shares at face value.

Can I issue shares at face value under 56(2)(x)?

Yes you can issue shares at face value and there won’t be any issue. 56 (2) (viib) applies where you issue shares at a premium but here you are issuing shares at face value so there won’t be a problem. 56 (2) (X) only applies to individual and not company.

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Is valuation of shares required under Section 62(1)?

As per Section 62 (1), A Company can issue and allot shares on Face Value irrespective of Net worth of Company. However, under Section 62 there is no requirement of Valuation of Shares. Therefore, one can opine that in case of right issue there is no need of Valuation Report.

Is valuation report required for right issue of shares under Companies Act?

Companies Act: There is no requirement of valuation report for right issue of shares under Companies Act, Irrespective of fact whether shares issue on Face Value or Premium. Income Tax Act: As per Income Tax Act in case of right issue of shares, shares are issued to existing shareholders only in proportion to their shareholding.