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Definition

A general term used to describe the difference between the price at which a share was first issued and the current price. Often, a successful company wants to issue additional shares to raise the capital for expansion. The price of these new shares will reflect the growth of the company since its incorporation and so they will be sold for more than the selling price of shares of the same class when the company was first formed. The additional amount in excess of the par value is a share premium, and is shown separately in a share premium account which is reflected under Non-Distributable Reserves in the company's balance sheet.

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