[amp_mcq option1=”Giving bonus shares to members” option2=”Writing-off preliminary expenses of company” option3=”Writing-off discount on issue of debenture” option4=”Distribution of dividend to members” correct=”option4″]
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.