Allotment of shares

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Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2013 Dear Members,

Whether the unsecured loan (without interest)
granted to a company be converted into the Share Application money, later when the company decides to increase its share capital.

Here the company has to increase its share capital, whether it can convert its unsecured loans into Share Application money with the approval of the lenders.

Thanks & Regards

Ankur Garg

Ankur Garg (Expert)

01 May 2013 There is no restriction on conversion of unsecured loan into equity share capital. But for that there is no need to first convert the loan into share application money.
You are advised to enter into an agreement with lender for conversion of loan into equity.
For allotment call a board meeting and pass the board resolution for allotment of shares. Also file form2 with ROC for allotment of shares.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2013 Thanks Ankur Sir,

Please guide a little further regarding, what will be the position if few of these loans are from holding company (unlisted public company) and subsidiary companies (private limited companies).
Whether it can issue shares to these companies too.

Thanks...

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