Allotment of shares without consideration

Do you want to allot shares against rent to be paid?

Yes i want to allot shares in advance  for rent to be paid

It would be advisable to avoid such transaction in view of legal complexity.  Legally perhaps you can do so in a private limited company if the Articles so permit and you enter into a separate agreement for allotment of shares against rent and pay stamp duty on the same.

Better dont mess up Crs for Expns & Owners Fund.

Dear Revanth,

1. Basically it relates to financial strategy of the company.  It depends on the requirement of longterm capital the company's decision would be a wise one because it is capitalisation of present and future liability.  

2. Current liability and working capital would get capitalised. And such capital may be used to finance fixed assets and current assets.

3. Though it dilutes eps but it requires no servicing.

Under the Companies Act:  

Assuming the company is private company:

1. Check whether articles of association provides for such allotment

2. Enter into well drafted agreement with the owner of the building

3. Pass resolution, allot shares, file return of allotment under sec.75(1)(b) or 75(2) in case there is no written document and pay the stamp duty.

Dear Uma Devi

Whats my issue is can i allot shares in adavnce? if ia looted so what are the tax implications? is it teated as income or in the hands of the investor ?

Dear Revanth, 

It is taxed in the hands of investor.