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Allotment of equity shares by the P ltd. Co.

somesh kumar agarwal (CONSULTANT) (39 Points)

16 April 2010

Dear Sir,

Plz. clarify whether a private limited company can issue its shares on premium after 1-June-2010 i. e. share with face value of Rs. 10 can be issued at Rs. 100 or not.

Plz. refer amended Sec. 56(2) wherein shares and securities of Pvt. ltd. co. can not be transfered at a price lower than its fair market value.

Please clarify it shares can be issued at a value higher than the book value

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2 Replies

Amir (Learner) (4016 Points)
Replied 16 April 2010

Dear Somesh Sir,

Issue of Share is different from Transfer of Shares - Unless shares are issued there is nothing which can be transfered.(except in case of right renouncement)

So Pvt. company can still issue shares at premium after this amendment.

Secondly, Sec 56(2) never restricts the transfer and securities can be tranfered without consideration or for a condideration which is less than their FMV, only thing is the difference is proposed to be made taxable in the hands of receipient.