Conversion of share application money into unsecured loan
This query is : Resolved
09 July 2015
Dear All,
We are a private limited company and share application money has been pending since 1 year. Now they want to convert the Share application money into unsecured loan.
Can we convert the Share application money into unsecured loan?
If it is possible guide me the procedure for such conversion.
Thanks in advance.
We are a private limited company and share application money has been pending since 1 year. Now they want to convert the Share application money into unsecured loan.
Can we convert the Share application money into unsecured loan?
If it is possible guide me the procedure for such conversion.
Thanks in advance.
09 July 2015
Since the same has been named as 'Share application money pending allotment', you will have to follow the normal route.
I.e, you will have to refund the Share Application money accepted, on which shares has not been allotted. Hence, you gotta pay it with Interest @ 18% p.a from the 120th day.
No other routes are available if you want to do it lawfully.
I.e, you will have to refund the Share Application money accepted, on which shares has not been allotted. Hence, you gotta pay it with Interest @ 18% p.a from the 120th day.
No other routes are available if you want to do it lawfully.
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09 July 2015
Thank you John for your information.
However Let me know the legal procedure for such conversion.
Thanks in advance
However Let me know the legal procedure for such conversion.
Thanks in advance
09 July 2015
Pls refer sec 180.
180. (1) The Board of Directors of a company shall exercise the following powers only
with the consent of the company by a special resolution, namely:—
(a) to sell, lease or otherwise dispose of the whole or substantially the whole of
the undertaking of the company or where the company owns more than one undertaking,
of the whole or substantially the whole of any of such undertakings.
Explanation.—For the purposes of this clause,—
(i) “undertaking” shall mean an undertaking in which the investment of
the company exceeds twenty per cent. of its net worth as per the audited balance
sheet of the preceding financial year or an undertaking which generates twenty
per cent. of the total income of the company during the previous financial year;
(ii) the expression “substantially the whole of the undertaking” in any
financial year shall mean twenty per cent. or more of the value of the undertaking
as per the audited balance sheet of the preceding financial year;
(b) to invest otherwise in trust securities the amount of compensation received
by it as a result of any merger or amalgamation;
(c) to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its paid-up share capital
and free reserves, apart from temporary loans obtained from the company’s bankers in
the ordinary course of business:
Provided that the acceptance by a banking company, in the ordinary course of
its business, of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a
borrowing of monies by the banking company within the meaning of this clause.
Explanation.—For the purposes of this clause, the expression “temporary loans”
means loans repayable on demand or within six months from the date of the loan such
as short-term, cash credit arrangements, the discounting of bills and the issue of other
short-term loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;
180. (1) The Board of Directors of a company shall exercise the following powers only
with the consent of the company by a special resolution, namely:—
(a) to sell, lease or otherwise dispose of the whole or substantially the whole of
the undertaking of the company or where the company owns more than one undertaking,
of the whole or substantially the whole of any of such undertakings.
Explanation.—For the purposes of this clause,—
(i) “undertaking” shall mean an undertaking in which the investment of
the company exceeds twenty per cent. of its net worth as per the audited balance
sheet of the preceding financial year or an undertaking which generates twenty
per cent. of the total income of the company during the previous financial year;
(ii) the expression “substantially the whole of the undertaking” in any
financial year shall mean twenty per cent. or more of the value of the undertaking
as per the audited balance sheet of the preceding financial year;
(b) to invest otherwise in trust securities the amount of compensation received
by it as a result of any merger or amalgamation;
(c) to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its paid-up share capital
and free reserves, apart from temporary loans obtained from the company’s bankers in
the ordinary course of business:
Provided that the acceptance by a banking company, in the ordinary course of
its business, of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a
borrowing of monies by the banking company within the meaning of this clause.
Explanation.—For the purposes of this clause, the expression “temporary loans”
means loans repayable on demand or within six months from the date of the loan such
as short-term, cash credit arrangements, the discounting of bills and the issue of other
short-term loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;
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09 July 2015
Thank you John for your kind information.
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