What is Share Premium explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Share Premium is a term you will often come across in Company Law. This guide explains what Share Premium means, gives a simple example, and shows why it matters for taxpayers and businesses — in plain English.
What is Share Premium?
Share Premium is the amount received by a company on issuing shares above their face value, credited to a separate securities premium account.
In practical terms, Share Premium is a company-law concept — it governs how companies are formed, managed or how their decisions are made. Understanding it helps you read financial documents, stay compliant and make better decisions.
Share Premium explained with an example
Issuing a ₹10 face-value share at ₹100 creates a ₹90 share premium per share. Examples like this make it easier to see how Share Premium works in real situations.
Why Share Premium matters
Share premium can be used for specified purposes like bonus issues, subject to law.
Share Premium at a glance
| Category | Company Law |
| Meaning | The amount received by a company on issuing shares above their face value, credited to a separate securities premium account. |
| Example | Issuing a ₹10 face-value share at ₹100 creates a ₹90 share premium per share. |
Key points to remember
- Where it applies: Company Law
- In short: The amount received by a company on issuing shares above their face value, credited to a separate securities premium account.
- Why it matters: Share premium can be used for specified purposes like bonus issues, subject to law.
Related terms
If you are learning about Share Premium, these related terms are worth knowing too:
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