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Allotment of shares without consideration

Ganesh ( Manager) (75 Points)

27 January 2011

I just had an query regarding whether shares can be alloted to the Promoter/ Promoter Company or Director of the Company without any consideration????

Awaiting for quick response.

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7 Replies

Sudhir Garg (Service) (236 Points)
Replied 27 January 2011

Dear Ganesh

As per comanies act Pvt company and pb company must be having paid up capital of Rs 1 lac and rs 5 Lacs respectively from the very first day. if you allots shares withour consideration, how this requirment be met out.

Therefore, consideration is very musch essential whether cash or in kind.

Regards

Sudhir

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Ganesh ( Manager) (75 Points)
Replied 27 January 2011

Dear Sudhir Garg,

The Pvt Ltd Company has already met with requirements of 1 lakh, But about additional allotment of shares to the Promoter/ Promoter Company???. I just wanted to know whether it is possible to allot shares without consideration to the Group Company for controlling interest??

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 27 January 2011

Hi,

Allotment of shares by any company is a contract as per the Indian Contract Act and for any contract there are certain conditions and one of those conditions is payment of "Consideration". Accordingly, without consideration the contract can't be completed. In case of allotment of shares the consideration may be "cash" or "other than cash".

Regards

CS Ashwini Kumar (csashwini1970 @ gmail.com)

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Ganesh ( Manager) (75 Points)
Replied 27 January 2011

What are the remedies available for a Group Company/ Promoter to acquire Shares in its subsidiary for controlling interest other than cash.

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 27 January 2011

Dear Mr. Ganesh,

Can you put your specific query ? (I mean actual facts). I may able to reply the same.

Regards

CS Ashwini Kumar(csashwini1970 @ gmail.com)

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Ganesh ( Manager) (75 Points)
Replied 27 January 2011

Thanks a lot for your valuable suggestion Mr.Sudhir Garg and CS Ashwini Kumar.

Dear CS Ashwini Kumar,

It won't be right on my part asking you queries without paying you fees. It feels quite awkward. U r professional and have strived hard to achieve this position. I am too pursuing my CS. I am very thankful for you valuable suggestion.

Please if in return I can help you the same, then I'll take your advise.