Share capital

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Vipul (Querist)
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21 April 2015 Can promoters contribute in kind towards share capital ?

What is the procedure ? What forms to be filed with MCA ?

Arpit Shah

Arpit Shah (Expert)
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21 April 2015 https://taxguru.in/company-law/companies-act-2013-the-companies-share-capital-and-debentures-rules-2014.html

Arpit Shah

Arpit Shah (Expert)
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21 April 2015 https://taxguru.in/company-law/procedure-increase-authorize-capital-companies-act-2013.html

Vipul

Vipul (Querist)
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21 April 2015 There is nothing in this article regarding Contribution in kind..

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Yes, promoters can contribute in kind (non-cash assets) towards share capital of a company. This is called issue of shares against consideration other than cash.

Key Points and Procedure:
Valuation of Assets

The non-cash assets (like machinery, land, intellectual property, etc.) must be valued by a Registered Valuer to determine their fair market value.

Board Approval

The Board of Directors must approve the proposal to issue shares against these non-cash assets.

Shareholders Approval

If shares are issued for consideration other than cash, approval by shareholders is generally required via special resolution in a General Meeting (unless covered under specific exemptions).

Issue of Shares

Shares are allotted to promoters against the valued assets.

Filing with MCA

File Form PAS-3 (Return of Allotment) within 30 days of allotment with Registrar of Companies (ROC).

File Form SH-7 if the authorized share capital needs to be increased to accommodate new shares.

Disclosure of valuation report may be required in board/shareholders resolution records.

Accounting Treatment

The assets contributed in kind are recorded at the fair value as per the valuer's report in company books.

Share capital is credited with corresponding value.

Relevant Sections of Companies Act, 2013:
Section 62(1)(b) - Issue of shares for consideration other than cash.

Section 42 - Private placement rules (if applicable).

Section 56(2)(vi) - Valuation rules and disclosure for shares issued for non-cash consideration.

Summary of MCA Filings:
Form Purpose Time Limit
PAS-3 Return of allotment Within 30 days of allotment
SH-7 Increase in authorized capital Within 30 days of resolution

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