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issue of shares in lieu of technical know how

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13 August 2008 A private ltd company which is registered in 1990 specializes in repairs /servicing &
manufacture of spares for turbines. One of the four promoters is the chairman of the company
as the remaining three passed away. The paid up capital of the company is Rs.2,05,000.
The free reserve in p/l A/c as on 31st march 2008 is Rs.24,00,000. The company does not have
any immovable fixed assets other than regular Plant & Machinery. The company is running its
business in a factory land & buiding on rent which is owned by the chairman of the company.
The estimated market value of this land & building is Rs.2,00,00,000. The current turnover
of the company is around Rs.1 Crore. The company has very good potential in improving its
turnover to Rs.10 to Rs.15 crores in the near future. The company is in need of funds for the
expansion. The company has only overdraft facility of Rs.75,00,000. There are investors &
other financial institutions to fund the growth but looking at the financials they shy away
indicating that the promoter's contribution is too low & the company does not have any
immovable properies.

Can we issue shares for obtaining the technical know how developed by the earlier directors
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S.Srinivasaraghavan

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S.Srinivasaraghavan (Expert)
13 August 2008 Please refer to Unlisted companies (Issue of sweat Equity shares)Rules 2003.
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CA Abhishek Tyagi

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CA Abhishek Tyagi (Expert)
13 August 2008 You should refer to the Unlisted Companies (issue of sweat equity shares rules 2003 in the bare act.
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