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Section 53 Of Companies Act 2013: Prohibition On Issue Of Shares At Discount

SECTION-53 (Prohibition on issue of shares at discount) under CHAPTER-IV (Share Capital and Debentures) of the Companies Act, 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 or the Banking (Regulation) Act, 1949.


(3) Where a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.




Extra Notes for Readers

(1) The Companies Act, 2013 received the assent of the President on the 29th August, 2013 (Published in the Gazette of India, Extraordinary, Part II - Section 1 by Ministry of Law and Justice, Legislative Department on 30th August, 2013).


(2) Section 53 of the Companies Act 2013 was notified by MCA Notification S.O. 902(E) dated 26th March 2014 (w.e.f. 1st April 2014).

(3) Also, refer the Companies (Share Capital and Debentures) Rules, 2014 and any amendments thereto.



(4) Section 53 of the Companies Act 2013 was modified by the Companies (Amendment) Act 2017. (w.e.f. 9th February, 2018 - MCA notification)




This page was last updated on 9th February, 2018.

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