14 June 2011
What should be the percentage of paid up capital on a fully diluted basis in the following scenario.
* XYZ Pvt Ltd., company has been registered with the Authorised & Paid up capital of Rs. 1 Lakh. * XYZ Pvt Ltd., is raising funds & the current valuation of the company by the investors is about 4cr. * The investor is investing about 1 Cr for 20% of the shares with the post funding valuation of 5Cr.
The Questions are:
1. In this case what should be the Authorised / Paid up capital of the company. 2. Should the change be informed to Ministry of corporate affairs & should the value be incorporated in the registration details. 3. How & what number of shares should be allocated to the Investor & the promoters to get desired percentage of 80:20 in favour of the promoter.
14 June 2011
There are many possibilities. One such possibility is as under:
Increase the authorised capital of the company by a suitable amount say Rs 1 lakhs.
Allot shares worth Rs 25000 to the investor at a total share premium of Rs 9975000.
In this way post allotment out of total paid up capital of Rs 125000, the promoters will continue to hold shares of Rs 100000(80%) and the investor will hold shares of Rs 25000(20%).
14 June 2011
There are 2 aspects in your case 1) Valuation 2) Payment by investor
Now as regards valuation is concerned, it does not require any sanction or intimation to the Registrar of Companies.
Against valuation you can charge Share premium. Now, if you are giving 20% out of the present share capital then it is to be given by the existing shareholders and they will sale 20% shares of Rs. 1 lac to the investor and whatever money i.e 5 Cr is to be received shall be received by the Existing shareholders of the company on which they have to pay the Capital Gains tax.
The other way round you is to increase your share capital issue the shares as suggested by CA Daruka but you can issue the shares at a premium and the premium collected by th company shall be capital receipt in the hands of the company and no tax is payable on this amount. You have to pay the regular fees of R.O.C for the increased capital with filing of necessary resolutions, documents and papers as required by the various provisions of the companies act.
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