78. Application of premiums received on issue of shares.
Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called" the share premium account"; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid- up share capital of the company.
The share premium account may, notwithstanding anything in sub- section (1), be applied by the company-
in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;
in writing off the preliminary expenses of the company;
in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or
in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company.
Where a company has, before the commencement of this Act, issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act: Provided that any part of the premiums which has been so applied that it does not at the commencement of this Act form an identifiable part of the company' s reserves within the meaning of Schedule Vl, shall be disregarded in determining the sum to be included in the share premium account.