Can a pvt ltd company sell the assets of the company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2015 Dear All,

A pvt Ltd has 2 direcors and a land is in the name of the Pvt Ltd Company

Now the director want to sell the land of the company and Passess a Board Resolution that they they authorise someone else to sign the selling papers in govt dept

Can they do this,is it legal under companies Act

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2015 if Anyone aware of this please reply its urgent

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

18 July 2024 Yes, a private limited company can sell its assets, including land, subject to certain legal requirements and procedures under the Companies Act, 2013. Here’s a general overview of the process:

1. **Board Resolution**: The Board of Directors of the company must pass a resolution authorizing the sale of the land. This resolution should specify details such as the terms of sale, the person authorized to sign the sale documents on behalf of the company, and any other relevant conditions.

2. **Approval of Shareholders**: Depending on the value of the land and the company’s Articles of Association (AOA), approval from the shareholders may be required. If the sale of land constitutes a material transaction, it may require approval by a special resolution in a general meeting of shareholders.

3. **Valuation**: It’s common practice to get the land valued by a registered valuer before proceeding with the sale. This helps determine a fair market price and ensures compliance with regulatory requirements.

4. **Execution of Documents**: Once authorized by the Board, a person designated by the Board can sign the necessary sale documents on behalf of the company. These documents include the sale deed or conveyance, which are required to be registered with the relevant government authorities.

5. **Compliance**: The company must comply with all applicable legal provisions, including those related to stamp duty, registration of documents, and any specific regulations governing land transactions in the state or jurisdiction where the land is located.

6. **Reporting and Documentation**: After the sale, the company must maintain proper documentation of the transaction, including the Board resolution, sale agreement, valuation report, and other relevant papers. These documents are crucial for audit and compliance purposes.

In summary, selling company assets like land involves a formal process of authorization by the Board of Directors, compliance with legal requirements, and proper documentation. As long as these steps are followed, the sale of company land is legal and valid under the Companies Act, 2013. It’s advisable to consult with legal and financial professionals to ensure compliance with all applicable laws and regulations before proceeding with such transactions.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now