As per CA 2013 all companies requiered to pay off there loans from relatives & members before 31st March 2014. What will be the procedure if a private limited company wants to convert its USL into Equity assuming there is no contract made for conversion at the time of giving USL & USL is taken only from the members of the company ?
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Conversion of unsecured loan to equity share
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Refund the loan to the members through banking channels and complete formalities for issue of fresh shares as per the Act and take share application money accordingly. In case the company is not having surplus funds for refunding the loan, it can be planned in such a manner that the date of refund of loan and taking share application money is same. If both the members and the company have their account in the same branch of the bank, it will be helpful.
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