Giving bonus shares to members
Writing-off preliminary expenses of company
Writing-off discount on issue of debenture
Distribution of dividend to members
Answer is Wrong!
Answer is Right!
The correct answer is D. Distribution of dividend to members.
Security premium is the excess of the amount received by a company for issuing shares over the face value of the shares. It is a capital reserve and cannot be used for the distribution of dividend to members.
The other options are correct.
A. Giving bonus shares to members: Security premium can be used for giving bonus shares to members.
B. Writing-off preliminary expenses of company: Security premium can be used for writing-off preliminary expenses of company.
C. Writing-off discount on issue of debenture: Security premium can be used for writing-off discount on issue of debenture.