The difference between the price paid to a company for a share and its nominal price as set by the company. If a £1 share is issued by a company for £5 then the share premium is £4.
Share premiums are usually paid when shares are issued later in the life of a company when the original shares issued by it will have risen in value. The share premium is intended to create equity between all shareholders by requiring that they broadly equally contribute for their share compared to the value of the company as a whole at the time of the share's issue.
Share premiums represent part of shareholder equity on the balance sheet of a company for accounting purposes.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
