Shares allotted in the name of directors

This query is : Open

Milan Agrawal (Querist)
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05 September 2014 Dear All,

Greetings.

One of a public limited company (say A Ltd.) has received share application money from a private limited company (say B Pvt. Ltd.). Now, A Ltd.alloted its shares not in the name of B Pvt. Ltd. but in the name of 2 directors of B Pvt. Ltd. As we know, a public limited company must have minimum 7 shareholders, A Ltd. has also only 7 shareholders including the 2 shareholders i.e. the 2 directors of B Pvt. Ltd. Further, A Ltd. has taken huge amount of Interest free unsecured loan from B Pvt. Ltd.
My Query is:

1. Is this legally correct to allot shares in the name of the directors of the company. If not, what is the remedy available for this act?

2. How the unsecured loan be dealt with as per the provisions of New Companies Act, 2013?

Regards,
CA Milan Agrawal

CS Divesh Goyal

CS Divesh Goyal (Expert)
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06 September 2014 If you are.receicing money from b ltd.then share will be issue un.the name.of.b ltd.
a ltd.taking loan from b no problem for.a ltd.just a ltd if.taking loan after 1st april 2014 pass resolution u/s 179(3) and.check limit u/s 180(1)(c)

Milan Agrawal

Milan Agrawal (Querist)
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06 September 2014 Thanks Divesh for your kind concern over my query. However, I want to know what is the remedy now available against the shares allotted in the name of the directors?

Further, regarding loan, A Ltd. has taken loan from B Pvt. Ltd. at 12 times of its paid up share capital, e.g. if paid up share capital of A Ltd. is Rs. 1 Lakh, it has taken loan of Rs. 12 Lakhs from B Pvt. Ltd. So, what should be done now?

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