Mortgage equity share by a company

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amit trivedi (Querist)
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12 July 2012 Can a Company (Pvt. Ltd or Public Ltd.) take a loan by mortgage its Equity share Capital?

Please give me detailed answer.

Thanking you

Hitendra Jain

Hitendra Jain (Expert)
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12 July 2012 Equity share capital is liability and not asset.
share capital not issued / subscribed / paid up has no existence
Shares are held by shareholders as investments.
they can provide guarantee and for that guarantee pledge /mortgage the shares as security for the loan taken by the company.
company can mortgage its assets only and not other's assets.
it can issue shares (authorized but not subscribed) to the financer as security for the loan but can not mortgage.

amit trivedi

amit trivedi (Querist)
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13 July 2012 Means Shareholders can give guarantee for pledge/ mortgage their shares on behalf of the company for the loan taken by the company? under which section and any agreement or resolution of BOard or General meeting?

Ajay Mishra

Ajay Mishra (Expert)
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13 July 2012 Hi

Section 125(4)(e) give exemption to create a charge on pledge of movable property (shares) of the company.

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