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Allotment of Shares other than cash

Pravin (Associate) (127 Points)

20 August 2010

Dear All,

Can company issue shares to promoters for transfer of development rights on land held by promoters as consideration other than cash?

Pravin

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10 Replies

Neha Gupta (PCS) (377 Points)
Replied 20 August 2010

In my opinion yes the company can issue shares to promoters for a consideration other then cash (i.e. Rights of Development of land). And as per provisions of Section 75 u have to file Form 2 for allotment of shares, if there is no agreement for between promoters and company for transfer of such rights.

If having a contract then Form 3....

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 21 August 2010

Agree with Neha. However there should be proper valuation of such right like valuation report should be attached.

Jagruti (CS) (Service) (1953 Points)
Replied 21 August 2010

Just to Correct Neha, that if there is written agreement duly stamped than Form 2 need to be filed along with such agrement or Document.

But there is no written document duly stamped than Form 3 need to be filed before filing Form 2.

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Neha Gupta (PCS) (377 Points)
Replied 21 August 2010

Thanks Jagruti mam, for correcting my statement, actually I m not aware of this Stamping provisions of Agreement and its further dealing....

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 21 August 2010

Whenever a Company, having a share capital, makes any allotment of shares, the company shall within 30 days of the Allotment, file a return of allotment in form 2.

A Company can make allotment of shares at a consideration either for cash or other than cash.

If the Company has allotted the shares at a consideration other than cash.

(i)Then for consideration there must be a contract in writing and the contract must be duly stampted. The copy of contract must be attached in form 2

(ii) If such contract is not duly stamped then form 3 is also required to be filed along with the stamp duty as would have been payable if the contract had been duly stamped.

Neha Gupta (PCS) (377 Points)
Replied 21 August 2010

In my opinion From 2 will also be filed along with Form 3 as per the provisions of Section 75(2) of the Companies Act, 1956 if such Contract is not duly stamped.