Sale of shares - accounting

Hi,


I work in a Pvt Ltd Company.  the following transaction has happened in my Company.


1. Company had 8 Share Holders.

2. A Venture Capital Firm has invested in the Company.

3. Existing Share Holders sold some of their shares to Venture Capital Firm

4. Also company sold some Preferential Shares to Venture Capital Firm


Please help in passing entries in Books of Accounts,


1. What entry need to passed for issue of Preferential Shares

2. What entries needs to passed for sale of Equity shares by individual Share holders

Replies (1)

If the Company has issued fresh Preference Shares to the Venture Capital Firm  the VC Firm brings in funds,then the following JE needs to be passed

1.  Bank A/c Dr

     To Venture Capital Firm A/c

2.  Venture Capital Firm A/c Dr.

       To Securities Premium

        To Preference Share Capital A/c

If the Shares are issued at Face Value, then there is no need to Credit Securities Premium A/c. 

According to my opinion, there is no need to pass any Journal Entry for the sale of existing shares by the individual shareholders to the VC Firm because the transaction does not concern the company. No fresh Capital is introduced to the Company and there is no change in the Share Capital of the Company. But the relevant Registers need to be updated and fresh shares are to be issued in the name of the VC Firm after they duely execute the Share tranfer Deed. 

Regards,

Viggi

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details
Company
ARTICLESHIP 26 August 2026
CA Article Assistant/CA Drop Out/Accounts Executive

PARV & Co.

New Delhi

CA Inter

View Details
Company
27 August 2026
ACCOUNTANT

CHARUPREETI & CO

Noida

Graduate (Any)

View Details
Company
09 September 2026
Semi Qualified CA / CA Inter - 2 Groups Cleared

Getmyca Consultant Pvt Ltd

New Delhi

CA Inter

View Details
Company
15 September 2026
Client-site CA associate

Aditya Muley and Co

Mumbai

CA

View Details
Company
ARTICLESHIP 18 September 2026
Industrial Trainee

Twenty Point Nine Five Ventures Private Limited

Noida

CA Inter

View Details
Company
ARTICLESHIP 29 August 2026
Article Assistant

RRPM & ASSOCIATES LLP

Chennai

CA Inter

View Details
Company
09 September 2026
Chartered Accountant

Aviv Global Private Limited

Ahmedabad

CA

View Details