Suggestion needed for starting a company

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2014 Dear All,

Our group of friends want to start a company whose primary businesses would be

- Purchase & Sale of Property
- Development of Property & Sale

We plan to have 50 shareholders who would contribute 50,000 each half yearly for 5 years. Thus taking the company to 2.5 Crore's.

1) Managing Director would either get 10% sweat equity or 10% of Net Profit every year. What is better ??

2) How we should place its authorized capital as ? , should it be 2.5 Cr from the start itself (it would be costly :) )? or we can start with some other amount ? and keep increasing ??. how to consider future expansions if we subscribe all the authorized capital ??

3) should we charge some premium in share allotment to shareholder's ??

Any other suggestions are also most welcome around the same.

Regards

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 January 2014 1. I would suggest net profit...

2. you can start with a smaller authorized capital base..no point in incurring higher stamp duty to start with, this would leave lower amount of cash in your hand to start with.

3. premium will depend on valuation model..so cannot on this.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2014 Thanks Nikhil 2 points

- how much should be authorized capital to start with, how difficult it is to later increase authorized capital ?

- how to decide on a valuation model ?

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