Prohibition on issue of shares at discount
Section 53 of the Companies Act, 2013 deals with prohibition on issue of shares at discount. Except as provided in section 54, a company shall not issue shares at a discount. The Act came into force on 01 Apr 2014.
(1) Except as provided in section 54, a company shall not issue shares at a discount.
(2) Any share issued by a company at a 1[discount] shall be void.
2[(2A) 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 (2 of 1934) or the Banking (Regulation) Act, 1949 (10 of 1949).]
3[(3) 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 of 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.]
Section 53, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 1
Made under this section, and citing it
1 instrument states that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 1 instrument names this provision in its title or its text without being made under it.
Questions about Section 53
What does Section 53 of the Companies Act deal with?
Section 53 of the Companies Act is headed "Prohibition on issue of shares at discount". Except as provided in section 54, a company shall not issue shares at a discount.
How do I find court cases under Section 53 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 53, section 53 Companies Act, section 53 of the Companies Act. People searching for it also type companies act 2013 section 53. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.
What should I read with Section 53 of the Companies Act, and has it changed?
Its own text turns on section 54 (Issues of sweat equity shares), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it. The rules and notifications made under it are where it actually bites, and there is one: most recently S.O. 325(E)_S.O. 325(E)-Commencement Notification dt 22.01.2021 (2021).
When did Section 53 of the Companies Act come into force?
Section 53 of the Companies Act, cited as Companies Act 53, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.