What happens if shares are issued at a discount on nominal value?

Issuing shares at a discount to their nominal value is generally not permissible under company law. In jurisdictions governed by the Companies Act, for instance, shares must be issued at or above their nominal value. Therefore, the correct interpretation is that while the issue is technically allowed, the shareholder is responsible for covering the discount.

When shares are issued at a discount, the nominal value remains unchanged, and the company effectively reduces the funds it receives per share. This raises important legal considerations, as shareholders cannot benefit from a discount without a contractual obligation to make up for the difference. Hence, if shares are issued at a discount, the law provides that the shareholder is liable to compensate the company for the difference between the nominal value and the discounted issue price.

Other responses do not accurately reflect the legal position. An automatic invalidation of the issue would not happen unless mandated by specific company regulations. Simply returning the discount to the company is not a typical remedy; rather, it’s the shareholder's responsibility to ensure that the company receives full value. Lastly, renegotiating the initial offer isn’t a standard practice once the shares are issued, as the terms of share issuance are typically fixed at the time of offering.