Section 53 of the Companies Act, 2013
Section 53 of the Companies Act, 2013 pertains to Prohibition on issue of shares at discount.
Here is the bare act text along with a simple explanation:
🔹 Bare Act Language:
Section 53: Prohibition on issue of shares at discount
Except as provided in Section 54 (which deals with sweat equity shares), a company shall not issue shares at a discount.
Any shares issued by a company at a discount shall be void.
Where a company contravenes the provisions of this section:
The company shall be liable to pay a fine which may extend to an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less, and
Every officer who is in default shall be punishable with fine which may extend to one lakh rupees.
🔹 Simple Explanation:
Companies are not allowed to issue shares at a price lower than their face value.
Only one exception: shares can be issued at a discount if they are sweat equity shares (as per Section 54).
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