26 July 2022
I know that a Private Company cannot issue shares to the public or 3rd Party and one of the way is to transfer the shares of an existing member. This includes giving notice by an existing member to company of his willingness to transfer his shares. The company giving notice to existing members to take his shares, if they want. If existing members do not respond, then the company has no choice but to transfer the shares to that 3rd party. Register Form Sh-4 and so on. But the above method will dilute the shareholding of existing member.
To overcome this, I thought of other options on my mind, which is correct? 1. The company hires the 3rd party as a Director. Issue new shares but existing members don't take it. So company gives new shares to the Director? 2. The company hires the 3rd party as a Director. Issues new shares to only him as ESOP?
CAclubindia
