Conversion of Unsecured Loan to equity

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yogesh (Querist)

01 September 2008 What is the procedure for conversion of unsecured loans to equity capital in case of private limited company?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

02 September 2008 Issue and Allotment of shares will be governed by the private limited company's
AOA. It has to be complied with.

yogesh

yogesh (Querist)

02 September 2008 If the MOA/AOA does not contains anything about the conversion of unsecured loan into equity; what procedure should be followed?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

07 October 2008 It is not necessary that AOA should contain the procedure for conversion. I advised that the procedure for allotment of shares as in AOA should be followed, as this is a pvt ltd which could have restrictive clauses if any.

Guest

Guest (Expert)

23 June 2012
There is no bar for conversion of loan into share capital. You are required to enter into agreement with lender for conversion of loan into capital.

Call a Board meeting and pass a resolution and file Form-2 and form 3 within 30 days.

Regards

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