Regarding conversion of unsecured loans into shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 May 2017 The Directors of an Unlisted Public Company have given Unsecured Loans to the Company, interest free and without any condition to convert the Loans into Shares.

During the year, the Board of Directors decided to convert the Unsecured Loans into Shares.

Can an Extra-ordinary General Meeting be called and Shareholders approval be taken and file Form MGT-14 with the Registrar of Companies.

c.bakshi

c.bakshi (Expert)
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31 May 2017 i think, there is no need of going through this lengthy procedure. the company has already received money from the subscriber. right issue will be shortest route. other views are also welcome

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2017 Dear Sir,

Can the Directors just give a declaration during Rights Issue, the unsecured loans as obtained from them can be converted in to shares.

If yes, kindly provide the procedure in details.

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c.bakshi

c.bakshi (Expert)
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13 June 2017 NO, you have to complete the procedure of right issue. though we have received money from them, but RIGHT issue means to give proportionate offer to every subscriber

Querist : Anonymous

Querist : Anonymous (Querist)

13 June 2017 So, if I give the proportionate offer to the Directors to subscribe the shares of the Company during the period of Rights Issue, and they giving a declaration to subscribe the shares of the Company, will that be constitiuted as valid application for Rights Issue to subscribe the shares of the Company.

Kindly advise.

c.bakshi

c.bakshi (Expert)
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20 June 2017 yes, but the other shareholders must renounce their proportionate shareholding in favour of the director