There are a few mandatory conditions that a company must meet before issuing shares at discounts. This is done to ensure that the discount is reasonable and fair.
Here are some of the conditions: -
Class Already Issued: The shares to be issued at a reduced price must belong to a class of shares that has already been issued.
-Seek Authorization: A resolution shall be passed in the general meeting of a company to authorize the issuing of shares at discount. It shall also be approved by the Company Law Board.
-At Least One Working Year: A company can issue shares at discount only if it has been functioning for a minimum period of one year from the date it was entitled to begin business transactions.
-Issue Shares Within 2 Months: The company shall issue shares at discount within two months from the date of approval by the Company Law Board.