Share premium - is income derived from the difference between market and nominal value of the securities at their placement.
In other words - it is the excess of the sale price above par value.
Share premium, in addition to exchange rate differences andthe difference from the revaluation of fixed assets included in the supplementary capital. The latter is the sum of non-current assets and revaluation surplus refers to the company's own assets.
Share premium is formed byplacement of securities, which can be private and public. In the first case the action implemented among a narrow circle of well-known investors, the second - on the free market, everyone.
Sometimes the concept of share premium and use with respect to the Company, in which case it represents the difference between the cost of shares by increasing the share capital and the nominal price.
It can be formed as a result of the initial public offering and issue of new shares with an increase in the share capital.
Share premium can only receiveliability companies, because only they have access to opportunities for the production of securities (shares). Issue of securities - is one of the sources of financial resources that are attracted to the solution stategicheskih purposes.
Share premium is only consideredas additional capital, it is not allowed to spend it on the needs of the consumer. He goes to the reserve fund of the enterprise, or increase the amount of profit.
Calculation of the emission of income
Share premium is calculated as follows: the nominal value of the shares - the price of shares (issue price).
In turn, the nominal valuecalculated as the ratio of the authorized capital to the amount of shares. The issue price of the shares, in a general sense - is the price at which the shares are sold by their first owners.
According to the formula, if the selling price is equal to the issue price, the share premium is not available.
Share premium can not be negative, because the issue price may not be lower than the nominal value. Otherwise the company will not be able to form its authorized capital.
If you try to transfer accountingterminology in Russian language, you can explain the essence of the concept of share premium by a simple example. The company has a share capital of 1 million p., It has issued 2 thousand. Shares. Thus, the nominal price of one share will amount to 500 rubles. (1000000/2000). Investors positively assessing the prospects of the company and waiting for their own profitability growth with the purchase of these shares, to offer it for a higher price. For example, they will buy the shares at the price of 1500 rubles. Accordingly, the share premium will be equal to (1500-500) * 2000 = 2 million rubles.
Also, the company may list its shares on thea premium, the positive difference between their price and will share premium. For example, the company at the nominal value of shares 1000 r. It has issued them at a price of 1500 r. Share premium is 500 p. One of the security.
If it comes to the secondary offeringafter repurchase from the shareholders, the share premium will be the difference between the redemption and the cost of subsequent placement. For example, the company bought back shares at a price of 1000 r., And later deployed 1,100 p. Share premium will be 100 rubles. per share.