Hi,
I would like to please know (for a small private limited company):
1) Under Companies Act 2013 can unsecured debt (from a shareholder) be converted to equity?
2) Is there anyway for a loss making company that has not traded in the last financial year to write off unsecured debt from balance sheet (loan from shareholder)?
Thanks a lot in advance for your help/guidance on this.
Sir,
The amount appearing in your books of Accounts need not be repaid as present as it was not a deposit as per the definition of Deposits Under Companies Act 1956.
It is advised to fix a tenure for repayment of this loan, say 5 years and company would repay the loan aftr 5 years.
however, the same loan cant be renewed.
In case you wish to convert the same into equity, you can but allot the share on 31st March 2014 Itself.
Second solution wont be suggested to do as IT officials wont solicit this thing.
Thanks a lot Gaurav.
What if the loan can not be paid off? Was taken over 5 years ago company purchased equipment which has been scrapped no business left at all only these unsecured loans from shareholders...i thought the point of a private limited company is "limited liability"....
Dear Sir,
Being a closely held private limited company, i presume the amount received must be from a relative. it is suggested to make that member as a Director of the company and then the same loan can continue to appear in your company's Balance Sheet
CAclubindia
