Equity share allotment

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mukesh kumawat

mukesh kumawat (Querist)
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19 February 2015 can a pvt ltd company issue a partly paid up equity share as per Company act 2013?

Dharmendra gupta

Dharmendra gupta (Expert)
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19 February 2015 SEBI could soon allow indian companies to issue partly paid up shares and warrants to foreign investors.
while subscribing to shares and warrants foreign investors would need to make an upfront patment of 25% and the remaining payment would be made in a staggered fashion in next18 to 20 months.

mukesh kumawat

mukesh kumawat (Querist)
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23 February 2015 Thanks Sir, But

Can a Indian Private Limited Companies Issue a partly paid up Equity share to indian investors and Directors relatives?

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Asha Kanta Sharma

Asha Kanta Sharma

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21 July 2024 Yes, as per the Companies Act, 2013, a private limited company in India can issue partly paid-up equity shares. Here are some key points to consider:

1. **Authority to Issue Shares:** Private limited companies have the authority to issue shares as per their Articles of Association (AoA) and the provisions of the Companies Act, 2013.

2. **Partly Paid-up Shares:** Partly paid-up shares are those for which the shareholder has not paid the full nominal value of the shares at the time of subscription. The company may decide the initial amount to be paid up on such shares, and the remainder is called the "call amount" or "unpaid amount."

3. **Conditions and Compliance:**
- **Authorization in AoA:** The AoA of the company should authorize the issuance of partly paid-up shares. If not explicitly authorized, the AoA may need to be amended.
- **Payment Schedule:** The company must determine the schedule for payment of the call amount on the partly paid-up shares.
- **Compliance:** The issuance must comply with the rules and regulations of the Securities and Exchange Board of India (SEBI), if applicable, and other relevant laws.

4. **Shareholder Rights and Liabilities:**
- **Rights:** Shareholders of partly paid-up shares are entitled to the same rights and privileges as shareholders of fully paid-up shares, except to the extent of the unpaid amount.
- **Liabilities:** Shareholders are liable to pay the unpaid amount when called upon by the company.

5. **Issue to Directors' Relatives:** Private companies can issue shares to directors' relatives, subject to compliance with the provisions of the Companies Act, 2013, and any related regulations. This includes ensuring that the issue is authorized by the board of directors and shareholders (if required), and the pricing complies with the rules on valuation of shares.

6. **Disclosure and Reporting:** The issuance of partly paid-up shares must be properly documented, including minutes of board meetings or resolutions, and disclosed in the company's financial statements.

In conclusion, yes, a private limited company in India can issue partly paid-up equity shares, including to Indian investors and directors' relatives, subject to compliance with the Companies Act, 2013, and other applicable regulations. It is advisable to consult with a company secretary or legal advisor to ensure all legal requirements are met before proceeding with such an issuance.