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govt. co.

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12 September 2010 pls anyone tell me there is a govt. co., in which govt. is holding 80% shareholding n now govt has given Rs. 1 cr. to get more equity shares bt co. can't issue shares to govt.than nw how we will treat with rs. one crore and in which head of balance sheet this amount will be shown?????????
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Thrissurkkaran Ishtan

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Thrissurkkaran Ishtan (Expert)
25 September 2010 Though I am not sure on what grounds the shares cannot be issued, since the same is received for the purpose of shares and if there are circumstances preventing issuing shares the amount should be returned.
If the govt still wants to inject funds into the business the same amount can come back as a loan into the company with an appropriate loan agreement.
An alternative way would be to write up an agreement to nullify the equity application money and convert it to loan. This will avoid funds going back and forth. But the company secretary can advise you better on that.
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