As per the Section 78 of the Companies Act of 1956, the amount of securities premium can be used by the company for the following activities:
• For paying up unissued shares of the company to be issued to members of the company as fully paid bonus share.
• For writing off the preliminary expenses of the company.
• For writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.
• For paying up the premium that is to be payable on redemption of preference shares or debentures of the company.
• Further, as per the Section 77A, the securities premium amount can also be utilised by the company to Buy-back its own shares.
