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JAMB Principles of Accounts 1998 Question 42

Question 42

Company Accounts

Under which of these conditions can a company issue shares at discount? (I) A resolution must be passed at a general meeting (II) The amount of discount must be stated in the resolution (III) The share must have existed for at least six years (IV) On the order of a court

  1. A.I,II and III only
  2. B.I, II and IV only
  3. C.I, III and IV only
  4. D.II, III and IV only.
Show the answer and explanation

Answer: B (I, II and IV only)

Explanation

Shares may be issued at a discount only if authorised by resolution stating the rate and sanctioned by the court (and at least a year after the company began business).