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CONVERSION OF UNSECURED LOAN INTO EQUITY SHARES

CS AJAY TRIVEDI (SALARIED) (70 Points)

19 June 2009

CAN ANYBODY GIVE ME DRAFT COPIES OF LETTERS FROM BOTH THE PARTIES TO MAKE THE CONVERSION OF UNSECURED LOAN INTO EQUITY SHARES? WHAT WOULD BE THE PROCEDURE FOR A LISTED COMPANY? PLEASE GIVE GUIDANCE.

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4 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 20 June 2009

It would be advisable to repay the loan by cheque and then take share application money by cheque in view of provisions of Sec.269T of Income Tax Act.

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Ravi (Executive-Corporate Affairs) (31 Points)
Replied 22 September 2014

Dear Agarwal Sir

Greetings!

"It would be advisable to repay the loan by cheque and then take share application money by cheque in view of provisions of Sec.269T of Income Tax Act"

When i have money in my companies bank account i can do as you said. Now i don't have money to repay.In this case eaither i have to go for a fresh issue or for conversion of unsecured loan into equity.

Now my question which is an advisable one?

Thanks in advance.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 23 September 2014

1. Both company and director can have their accounts in the same branch of the Bank.

2. Thereafter company issues cheque to director for refund of loan.

3. Director issues cheque for share application money.

4. Both cheques can be deposited in the Bank on the same day and bank can be requested to pass both the cheques on the same day without funds just by transfer entry.