Securities premium

The amount received on issuing shares above their face value, held as a separate reserve inside equity.

A company issuing 5 crore shares of ₹2 face value at ₹240 records ₹10 crore as share capital and ₹1,190 crore as securities premium.

Its use is restricted by company law to specified purposes, which is why it is disclosed separately rather than merged into general reserves.

For analysis it is the marker of externally funded equity. A large premium balance means shareholders wrote cheques; a large retained-earnings balance means the business did.

Face value is nominal. The premium is the money.