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Section 53: Prohibition on issue of shares at discount.

The Companies Act, 2013Central Act · Act 18 of 2013

(1) Except as provided in section 54, a company shall not issue shares at a discount.

(2) Any share issued by a company at a [discount] shall be void.

[(2A) Notwithstanding anything contained in sub-sections (1) and (2), a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking (Regulation) Act, 1949 (10 of 1949).]

[(3) Where any company fails to comply with the provisions of this section, such company and every officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount of five lakh rupees, whichever is less, and the company shall also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the date of issue of such shares to the persons to whom such shares have been issued.]

Where this provision sits

ActThe Companies Act, 2013
Section53
Marginal noteProhibition on issue of shares at discount.
JurisdictionCentral
StatusIn force as published by the source
Judgments citing it7

How this provision has been amended

Taken from the footnotes printed with the provision by the source. Where a footnote names the amending instrument, it is quoted as printed.

  • substituted, Act 1 of 2018. . Subs. by Act 1 of 2018, s. 12, for "discounted price" (w.e.f. 9-2-2018).
  • inserted. . Ins. by s. 12, ibid. (w.e.f. 9-2-2018).
  • substituted, Act 22 of 2019. . Subs. by Act 22 of 2019, s. 9, for sub-section (3) (w.e.f. 2-11-2018).

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