06 December 2011
There is a private company. that has unsecured loan from director. but, the company wants to convert this into companies capital. is this possible ? and how ?
06 December 2011
Yes, it is possible.There is no bar in converting unsecured loan to share capital.You have to file FORM 2 with ROC .It will be considered as a case of issue of shares for consideration other then cash.
PROCEDURE FOR ISSUE OF SHARES FOR CONSIDERATION OTHER THAN CASH
(1) Convene a meeting of the Board of directors after issuing notice in accordance with the provisions of section 286 for considering allotment of shares for consideration other than cash.
(2) In case of listed company, immediately after the Board meeting send intimation of allotment of shares for consideration other than cash to the stock exchanges.
(3) If the allotment is to be made to the NRIs/Non-residents, obtain consent from RBI.
(4) After allotment having been made, within next 30 days, file a return of allotment of shares in e-Form 2 with the ROC.
(5) A certified copy of the agreement in pursuance of which allotment has been made shall also be filed with the ROC in e-Form 3, within 30 days after the allotment. If the agreement is not in writing, its main terms and conditions shall be reduced to writing in e-Form 3 and it shall be filed after being stamped.
(6) Issue share certificates in accordance with the Companies (Issue of Share Certificate) Rules, 1960.
(7) Make entry of the particulars in the Register of Members.
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