- This topic has 3 replies, 2 voices, and was last updated 11 years ago by
.
- Posts
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.
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
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.
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
- You must be logged in to reply to this topic.