CA Inter P2 · Chapter 4 · Question 4 of 11
Which of the following is NOT a permitted use of the securities premium account under section 52(2)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Payment of dividend to equity shareholders
Explanation
Section 52(2) permits the securities premium account to be used for fully paid bonus shares, writing off preliminary expenses, writing off expenses, commission or discount on the issue of shares or debentures, the premium payable on redemption of preference shares or debentures, and buy-back under section 68. It is treated like paid-up share capital, so it cannot be used to pay dividend.
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