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Incorporation of private limited company

Arunkumar (Chartered Accountant) (37 Points)

28 August 2013

Dear All,

Can any one guide me in the following:

1) Is is possible to Incorporate a private limited company by issue of shares to the promoters who are providing some of their own assets in addition to cash as contribution for the business? If so, what is the procedure?

2) In such cases, whether valuation of assets to be carried out by an expert?

3) Whether such assets will be considered for calculating the amount of Paid Up Capital?

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2 Replies

ASWINI (ARTICLE ASSISTANT) (44 Points)
Replied 28 August 2013

Yes, it is possible for incorporating subject to certain conditions. You have to consider whether the assets are movable or immovable and the transfer should be done in accordance with the rules specified in TRANSFER OF PROPERTY ACT(SEC:54). Yes, the assets should be valued by an expert. eg; IF A PERSON TRANSFERED CAR TO THE COMPANY THEN THE ENTRIES UN THE BOOKS OF COMPANY WILL BE; car a/c dr to person a/c for the person the company has to pay money but the person is asking shares in return. then the entries will be person a/c dr to share application money a/c share application money a/c dr to share capital a/c. this means we are adding the amount to paid up capital.. iam just article assistant. I gave you this information as per my knowledge. Plz mail me if there are any mistakes. my mail id: aswani.180 @ gmail.com