There is a Company X Ltd who had due to its creditor, Mr. S. X Ltd fails to pay the dues. Y Pvt. Ltd. (one of the group company of X Ltd.) on behalf of X Ltd. allots share to Mr. S in Y Pvt. Ltd. to clear the dues of X Ltd.
Can anybody tell me what are the sections of the Companies Act, 1956 that will be attracted?
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Allotment of shares
Replies (2)
how can Y Pvt. Ltd. Allots its shares to X Ltd. Creditor .?
because law says share can be allot with cash consideration or without cash. Here Mr. S did not bring any cash any other things for acquire share as per your query
When Y.Pvt Ltd allots shares to creditor of its parent company, The following adjustment should be made:
>Here Y.Co can reduce the investment of X.Ltd made in Y.Pvt.Ltd by the amount of shares alloted.
or it can Debit X.Ltd in its books.
This is a common adjustment seen in many cases.
>Shares can be alloted to creditors on dues.[Sri Ayyangar Spinning and Weaving mills Lts Vs V.V.V.Rajendran]
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