Shares Issued at a Premium

Where a company has issued shares at a premium, that is, at amount in excess of the nominal value of the shares, whether for cash or otherwise, Section 78 prescribes that a sum equal to the amount of the premium collected should be transferred to the Securities Premium Account. Since the Act provides that
the amount of premium will be considered a part of the share capital and that the amount of premium collected on shares can only be reduced in the manner prescribed for the reduction of capital, the amount of share premium received cannot be forfeited when the shares in respect thereof are forfeited.
The auditor should also see compliance with SEBI Guidelines.

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