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Paid up capital infusion procedure

26 November 2022

our company wants to issue shares to the director of the company. he has deposited the issue amount into the bank account of the company. what is the process to increase the paid up capital of the company. whether we should issue preferential allotment or private placement method or any other. also want to know Roc compliance of the same.

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Chirag (Professional) (1979 Points)
Replied 29 November 2022

You have to first pass board resolution for any kind of funding ,then shareholders resolution ( depending on the kind of security viz. NCD ,Pref allotment u/s 42+62 ,Sweat equity etc.) ,Open a separate bank account and get the securities allotted...here in the case director already give the money without passing any resolution ,without issuing any offer letter ,it will be considered as loan ( exempted deposit ) ,You have to credit back the money to director or enter into Shares purchase agmt with him before passing resolution and can consider money held in trust...and then allot securities ...but such method is not recommended because it's in divergence with what is prescribed by law..