28 August 2013
Respected sir, I and my father wants to register a privet limited company for production of seed. For production of seed agricultural land is required. so I will transfer my agricultural land 5 acre to company and my father will transfer 10 acre agricultural land to company. Against land I will get 33.33% share and my father will get 66.66% share. How to legalize this process, and what will the stamp duty on this.
28 July 2024
Transferring agricultural land to a private limited company in exchange for shares is a detailed process that involves several legal and regulatory steps. Here’s how you can go about it:
### 1. **Formation of the Private Limited Company**
1. **Name Reservation**: Choose a name for your private limited company and get it approved by the Registrar of Companies (RoC).
2. **Draft Memorandum and Articles of Association (MoA and AoA)**: Prepare the MoA and AoA, which define the company’s objectives and operational rules. Include the details of the share allotment against the land.
3. **Incorporation Documents**: - **Director Identification Number (DIN)** for the directors. - **Digital Signature Certificate (DSC)** for filing electronic documents. - **Proof of address** for the registered office of the company.
4. **File Incorporation Forms**: Submit the required incorporation forms to the RoC, including Form SPICe (INC-32), MoA, AoA, and other required documents.
### 2. **Transferring Agricultural Land to the Company**
1. **Valuation of Land**: Get a professional valuation of the agricultural land. This valuation will help determine the fair market value of the land, which will be used to issue shares.
2. **Share Allotment**: - Determine the number of shares to be issued based on the value of the land. - Allocate shares based on the agreed percentage (33.33% for you and 66.66% for your father).
3. **Land Transfer Agreement**: Draft a land transfer agreement specifying the terms of the land transfer, including the consideration (number of shares) and other conditions.
4. **Board Resolution**: Once the company is incorporated, pass a board resolution to approve the allotment of shares in exchange for the land.
5. **Register the Land Transfer**: - Prepare a deed of transfer to officially transfer the land to the company. - The deed should be executed and signed by you and your father, and the company should be a party to the deed.
### 3. **Stamp Duty and Registration**
1. **Stamp Duty**: Stamp duty on the transfer of agricultural land depends on the state in which the land is located. Each state in India has its own stamp duty rates for land transfers. Typically, the duty is based on the value of the land or the consideration (whichever is higher).
2. **Registration**: The deed of transfer must be registered with the local sub-registrar office where the land is situated. The registration process involves: - Paying the applicable stamp duty. - Submitting the deed of transfer and other required documents. - Attending the registration office for verification and finalization.
### 4. **Post-Registration Formalities**
1. **Update Share Register**: Once the land is transferred and shares are allotted, update the company's share register to reflect the new ownership structure.
2. **File Share Allotment Form**: File Form PAS-3 with the RoC, which is used to report the allotment of shares to the Registrar.
3. **Update Land Records**: Update the land records to reflect the company's ownership of the land.
### 5. **Additional Considerations**
- **Legal and Tax Advice**: It’s advisable to consult with a legal and tax advisor to ensure compliance with all regulations and to understand any potential tax implications, such as capital gains tax or stamp duty variations.
- **Regulatory Compliance**: Ensure compliance with all applicable laws, including those related to land acquisition, company law, and taxation.
### Summary
1. **Form the private limited company** and complete the incorporation process. 2. **Get the land valued** and draft an agreement for land transfer against shares. 3. **Transfer the land** to the company, paying the appropriate stamp duty and registering the transfer. 4. **Allot shares** to you and your father in proportion to the land transferred. 5. **Update company records** and comply with all regulatory requirements.
Following these steps will help you legalize the process of transferring agricultural land to a private limited company in exchange for shares. Always seek professional advice to navigate the complexities involved.
CAclubindia
