Purchase of shares

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Ashish (Querist)
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19 October 2012 Dear Members,

If a company purchases a majority shares of another company but consideration is passed in another year, whether it can show the company purchased as its subsidiary in this financial year.

Thanks
Ashish

Ajay Mishra

Ajay Mishra (Expert)
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20 October 2012 Hi

If the company has paid money for purchase of shares then the company make entry in its book as investment in shares of X co.

After allotment/transfer then he mentioned it take...........shares if Rs. 10/- in books of the company.

In addition, you will add in your Balance Sheet a Statement Pursuant to section 212 of the Companies Act, 1956 of subsidiaries.

Ashish

Ashish (Querist)
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20 October 2012 Thanks Ajay Ji,

Here payments were made, transfer deeds were properly executed, but cheques were not encashed before the close of financial and turned stale.
Meanwhile the purchaser company mentioned the investment in it books at the end of the FY and provided the details of subsidiaries u/s 212.
In this scenario what is the validity of the transaction and its solution.
The purchaser has reissued the cheques as a consideration. Will it serve the purpose.

Ajay Mishra

Ajay Mishra (Expert)
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22 October 2012 Hi

For Company which is going to made entry in its register of members is the document should be complete for giving the effect of transfer. If the company has made entry in its register as a member of allottee then it will be considered as holding company, whether the cheque was en-cash or not in time.

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