Share capital contribution in cash or kind
This query is : Resolved
15 November 2013
Hello Members,
I want to know that, i have to incorporate a company of paid up capital of 2 crore and the proposed director desires to bring its own asset/property and transfer this to company without consideration in order to fulfill the capital of Rs. 2 crore.
Is it mandatory to bring capital other than cash in case of Private limited company.?
Kindly update me on this urgent basis.
Thanks
I want to know that, i have to incorporate a company of paid up capital of 2 crore and the proposed director desires to bring its own asset/property and transfer this to company without consideration in order to fulfill the capital of Rs. 2 crore.
Is it mandatory to bring capital other than cash in case of Private limited company.?
Kindly update me on this urgent basis.
Thanks
16 November 2013
no...it is not mandatory to bring in cash. the consideration can be brought in kind also.
16 November 2013
If possible , then pl quote me the section so that i can discuss with client by showing them section.
25 July 2025
Sure! You can refer to the following **sections of the Companies Act, 2013** to explain that capital contribution **can be in cash or kind**:
---
### Relevant Sections:
1. **Section 2(52) – Definition of "Paid-up Share Capital"**
* "Paid-up share capital" means the amount of money **credited as paid on shares issued**; it can include **consideration other than cash**.
2. **Section 2(30) – Definition of "Share Capital"**
* Share capital can be issued for **consideration in money or money’s worth**, which means contribution can be in cash or other assets/property.
3. **Section 62(1)(b) – Issue of shares other than for cash**
* This section allows a company to **issue shares for consideration other than cash**, such as **assets or property**.
4. **Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014**
* Deals with allotment of shares against **non-cash consideration**, specifying procedure for valuation and due diligence.
---
### Summary you can share with your client:
> "As per **Section 2(30) and Section 62(1)(b) of the Companies Act, 2013**, the company may issue shares for consideration either in cash or in the form of other assets/property (money’s worth). Hence, it is **not mandatory to bring capital only in cash**. Contribution in kind is allowed, subject to proper valuation and compliance with the applicable rules."
---
If you want, I can also help draft a short explanation letter for your client quoting these sections. Would you like that?
---
### Relevant Sections:
1. **Section 2(52) – Definition of "Paid-up Share Capital"**
* "Paid-up share capital" means the amount of money **credited as paid on shares issued**; it can include **consideration other than cash**.
2. **Section 2(30) – Definition of "Share Capital"**
* Share capital can be issued for **consideration in money or money’s worth**, which means contribution can be in cash or other assets/property.
3. **Section 62(1)(b) – Issue of shares other than for cash**
* This section allows a company to **issue shares for consideration other than cash**, such as **assets or property**.
4. **Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014**
* Deals with allotment of shares against **non-cash consideration**, specifying procedure for valuation and due diligence.
---
### Summary you can share with your client:
> "As per **Section 2(30) and Section 62(1)(b) of the Companies Act, 2013**, the company may issue shares for consideration either in cash or in the form of other assets/property (money’s worth). Hence, it is **not mandatory to bring capital only in cash**. Contribution in kind is allowed, subject to proper valuation and compliance with the applicable rules."
---
If you want, I can also help draft a short explanation letter for your client quoting these sections. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CAPITAL GAIN REDEVELOPED FLAT
- Multiple payment of self assessment tax for A Y 2025-2026
- REGARDING ITR FILING QUESTION
- Requirement under FEMA &RBI
- CLOSING STOCK QUERY
- PF wage ceiling
- Correction in TDS return New Traces Portal
- TDS refund Indemnity Bond
- Query regarding TDS on EPFO Higher Pension Arrears- under wrong section
- Query regarding Item 61/62/63 vs Item 64 in ITR-3
- WHERE I SHOW GST 0% INVOICE IN GSTR1 (EITHER TABLE 7 OR TABLE 8)
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
- NRI ITR2 account in 2025-26.
- Query regarding reporting of exempt foreign remuneration in ITR (AY 2026-27)
- FEMA/RBI treatment — Amazon.ca arbitrage (US buy, Canada sell, goods never enter India)
- Goods return by customer
- INWARD REMITTANCE FOREIGN
- CPC and SAC
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
