Conversion of loan into share capital

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Himanshu Singhal (Querist)
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15 September 2011 if it is proposed that the loan is converted into shares , and new increased share capital will exceed authorised share capital.

So the company should increase its authorised share capital prior to accepting application money ? or it can accept application money prior to increasing authorised share capital

Hari Beldona

Hari Beldona (Expert)
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15 September 2011 Share application money can be accepted if there is sufficient balance in authorised capital (Authorised capital minus capital subscribed & issued).
Since the company does not have authorised capital, share application money
can not be accepted.

first increase authorised capital then accept share capital.

Himanshu Singhal

Himanshu Singhal (Querist)
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15 September 2011 Thanx a lot Sir for such a quick reply .
Can You Please Tell me relevant section of company law ?.

Hari Beldona

Hari Beldona (Expert)
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15 September 2011 Section 81 Further issue of share capital.

There are different views on acceptance of share application money. I expressed my view.

Himanshu Singhal

Himanshu Singhal (Querist)
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15 September 2011 Thankyou very much . m facing this problem while auditing a firm . m an intern .

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