Conversion of loan into share capital

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Himanshu Singhal (Querist)

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)

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)

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)

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)

15 September 2011 Thankyou very much . m facing this problem while auditing a firm . m an intern .

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