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redemption and issue of shares

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › redemption and issue of shares

Viewing 4 posts - 1 through 4 (of 4 total)
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  • May 7, 2014 at 4:32 pm #167802
    mikel
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    what the new standard say on redemption of preference shares at a premium being financed by an issue of equity shares at issued at a premium.does the premium on equity shares help to finance the redemption of preference shares.

    May 7, 2014 at 5:27 pm #167810
    MikeLittle
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    Which new standard? So far as I am aware, the premium payable on the issue of shares shall be credited to the share premium account.

    The share premium account can only be used for a restricted number of purposes (4) one of which is “to provide for the premium payable on the redemption of shares and / or debentures”

    I don’t believe in UK company law that there is any distinction drawn between preference shares redeemed at a premium and equity shares redeemed at a premium.

    However, you seem to be aware of a “new standard” that may throw my dinosaur beliefs into disarray.

    Please give me a reference for this “new standard” to which you refer

    Thanks

    May 8, 2014 at 1:43 pm #167912
    mikel
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    we were given this as a research topic by our lecturer.what we were only told was that the share premium was to be only used on redeeming debentures at a premium and again when redeeming preference shares at a premium without the issue of new shares to finance the redemption, the share premium account shall not be charged. Now my question is what happens when redeeming preference shares at a premium being financed by an issue of equity shares issued at a premium.does the premium on equity shares help to finance the redemption of preference shares.

    May 8, 2014 at 4:28 pm #167941
    MikeLittle
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    I seem to remember a small point that you may only use the share premium to provide for the premium payable on a redemption of share where those shares that are to be redeemed were originally issued at a premium

    I honestly do not know whether the premium on the issue made to finance the redemption is available to provide for the premium payable on the redemption

    I think that it probably is so long as the preference shares to be redeemed were originally issued at a premium ….. but I’m not 100% sure

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