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Clarification as to conversation of unsecured loans

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

18 May 2010

My client being Pvt Ltd. Co. having Authorised capital & Paid Capital of Rs.5000000/- & 100000/- respectively as on 31.03.2009. Now during the year 2009-10 the company received unsecured loans from directors of Rs.1550000/- in the month of Nov,2009,Dec,2009 & Jan,2010. However we want to consider the same as share application Money by converting it through Journal as on 31.03.2010 so that we can issue the shares by filing Form No.2 latest by 31.05.2010.

My query is whether it is possible through Hawala/JV & also benificial or not from law point of view.

Please reply urgent.

regards

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2 Replies

SUNIL KUMAR JAIN (PRACTISING COMPANY SECRETARY) (187 Points)
Replied 19 May 2010

Dear Mr. Sanjay Baheti,

In this case the director should give a written request for conversion of loan into Share application money. The Company should pass a Board resolution for such conversion.In case the director is a NRI, the allotment is required to be made within 180 days of receipt of share application money.I could not understand the reference made of hawala/JV.Please specify so that I may reply the same.

With Regards,

CS Sunil K. Jain FCS,AICWA ,Practising Company Secretary,9810104162 , skj13 @ rediffmail.com

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CA Sanjay Baheti (PROPRIETOR) (1155 Points)
Replied 19 May 2010

Thanks Mr.Sunil Jain for reply.

The meaning of hawala/JV is the adjustment routed through Journal as origionally the amount were credited to unsecured loans accounts in Books to square-up the same by debiting to unsecured loans account & credited to Share Application money account .