Section 82 — Power to issue shares at a discount

(l) Subject to the provisions
of this section, it shall be lawful for a company to issue shares in the company at a

discount:

Provided that—

(a) the issue of shares at a discount must be authorised by special
resolution passed in the general meeting of the company;

(b) the resolution must specify the number of shares to be issued, rate
of discount, not exceeding the limits permissible under this sect ion
and price per share proposed to be issued;

(c) in case of listed companies discount shall only be allowed if the
market price is lower than the par value of the shares for a
continuous period of past ninety trading days immediately preceding
the date of announcement by the board; and

(d) the issue of shares at discount must be sanctioned by the
Commission:

Provided further that approval of the Commission shall not be
required by a listed company for issuing shares at a discount if the
discounted price is not less than ninety percent of the par value;

(e) no such resolution for issuance of shares at discount shall be
sanctioned by the Commission if the offer price per share, specified
in the resolution, is less than-

(i) in case of listed companies, ninety percent of volume
weighted average daily closing price of shares for ninety
days prior to the announcement of discount issue; or

(ii) in case of other than listed companies, the breakup value per
share based on assets (revalued not later than 3 years) or per
share value based on discounted cash flow:

Provided that the calculation arrived at, for the purpose of sub-
clause (i) or (ii) of clause (e) above, shall be certified by the statutory
auditor;

(f) directors and sponsors of listed companies shall be required to
subscribe their portion of proposed issue at volume weighted
average daily closing price of shares for ninety days prior to the
announcement of discount issue;

(g) not less than three years have elapsed since the date on which the
company was entitled to commence business;

(h) the share at a discount must be issued within sixty days after the date
on which the issue is sanctioned by the Commission or within such
extended time as the Commission may allow.

(2) Where a company has passed a special resolution authorising the
issue of shares at a discount, it shall apply to the Commission where applicable, for
an order sanctioning the issue. The Commission on such application may, if, having
regard to all the circu mstances of the case, thinks proper so to do, make an order
sanctioning the issue of shares at discount subject to such terms and conditions as
it deems fit.

(3) Issue of shares at a discount shall not be dee med to be reduction of
capital.

(4) Every prospectus relating to the issue of shares, and every statement
of financial position issued by the company subsequent to the issue of shares, shall
contain particulars of the discount allowed on the issue of the shares.

(5) Any violation of this section s hall be an offence liable to a penalty
of level 3 on the standard scale.