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Query

Aman Thukral (Compnay Secretary) (28 Points)

25 October 2012

Dear All,

Query...

1. Can a private limited company allot shares in lieu of services? And if alloted can they forfeit shares if the service obligations are not fulfilled?

2. A euity shareholder holding 5-10% shares in a private limited company. Andwe demerge the company. Can this shareholder object for the demerger?

Regards

Aman Thukral

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2 Replies

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 26 October 2012

Dear Aman Thukral,

Please make a reference to section 79Aof the Companies Act which authorise the issue of sweat equity shares in consideration of the value addition ! Supply of technical know how etc

Usually the terms and conditions relating to forfeiture of shares are contained in the Articles. It is done usually when calls are in arrears.

Please let me know whether u have issued shares already. I do not know how u have issued shares even before the rendering of the services. Please make the query clear with more facts.

Regards,

RAJESH CHOUDHARY

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Pavan Zavar (NA) (57 Points)
Replied 28 October 2012

Demerger will attract provisions of Section 391/394 of Companies Act (assuming substantial part of company is being parted in demerger). The said resolution under 391/394 must be supported by shareholders satisfying following criteria: must be supported by shareholders satisfying following criteria:

A. Shareholders in Majority in Number, PRESENT AND VOTING.

B. 3/4^th in value of shares, PRESENT AND VOTING.

Therefore, you can go ahead with scheme of Demerger. However High Court may require company to arrange interest of dissenting shareholders (in your case 5-10% shareholders..) Their rights/interest may be secured by way of purchase of shares at the price mentioned in the scheme/ making scheme (which is accepted by majority shareholders) biding on them.