valid as on 10/10/2024

Section 53.Prohibition on issue of shares at discount.
Effective from 01-04-2014, font in blue from 09-02-2018 and font in green from 02-11-2018

1) Except as provided in section 54, a shall not issue at a discount.

(2) Any share issued by a company at a discounted price shall be void.

Notwithstanding anything contained in sub-sections (1) and (2), a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.

 Where any company fails to comply with the provisions of this section, such company and every officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less, and the company shall also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the date of issue of such shares to the persons to whom such shares have been issued.

(3) Where a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every  shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

Company means a company incorporated under this Act or under any previous company law
2(84) Share means a share in the share capital of a company and includes stock
Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification,Click Here
Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 and effective from 09.02.2018. To view the notification,Click Here
Substituted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 w.e.f., 02.11.2018. To view the Amendment Act, Click Here.
2(60) Officer who is in default, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely: —

(i) whole-time director;

(ii) key managerial personnel;

(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;

(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;

(v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;

(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;

(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer

Commencement Notification dated 09.02.2018


Enforcement Notification S.O. 902(E) dated 26/03/2014


The Companies (Amendment) Act, 2017 (Effective from 03.01.2018)


The Companies (Amendment) Act, 2019 dated 31.07.2019


The Companies (Amendment) Ordinance, 2018 dated 02.11.2018 [repealed vide the Companies (Amendment) Ordinance, 2019]


The Companies (Amendment) Ordinance, 2019 dated 12.01.2019 w.e.f., 02.11.2018


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