28 August 2012
If a firm converts into a company, the partners are alloted shares in the company. What will be the cost of such shares? Which section provides for the same?
28 August 2012
Transfer of – (a) a capital asset or intangible asset by a predecessor firm to its successor company; or (b) a capital asset to successor company in course of demutualisation/corporatisation of predecessor recognized stock exchange in India (being an Association of Persons or Body of Individuals) [S. 47(xiii)] (a) All the assets and liabilities of the firm/AOP/BOI relating to their business immediately before the succession become the assets and liabilities of the company; (b) In case of firm, all its partner become shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the succession; (c) In case of firm, the partners receive consideration only by way of allotment of shares in company. (d) In case of firm, the partners shareholding in the company in aggregate is 50% or more of its total voting power and continue to be as such for 5 years from the date of succession; and (e) The demutualisation or corporatisation of a recognized stock exchange in India is carried out in accordance with a scheme for demutualisation or corporatisation, which is approved by the SEBI.
I hope that it would clear your doubt,
Querist :
Anonymous
Querist :
Anonymous
(Querist)
29 August 2012
No, my doubt is not resolved. The partners will receive shares in the company pursuant to converion. When they will sell these shares, what cost will they take? If its their capital acc balance on the date of conversion, from which section does it come from? please revert.
CAclubindia
