If I have to increase the paid up share capital of a pvt ltd company, please let me know if we can allot it at face value of the share or with premium. E.G. if the face value is Rs.100/- and w.r.t. the book value its showing Rs.600/- which amount is to be collected from the subscribing members.
Regards
Nishant
You can very well allot it at a premium of Rs. 500. Pass the resolution and file Form 2 accordingly.
Snehaji,
Thanks for the prompt reply.
Our CS told us that the for Pvt Ltd Co. the shares to be issued at face value only and for Public Ltd Co. its at market value. I am still confused a bit. Is there any written clause related to the topic?
Regards
Nishant
Dear Nishant,
No need to worry. There is no provision in the companies Act which prohibits a private limited company to issue shares on premium.
Section 78 of Indian Companies Act deals with uses of Securities Premium and there is no restriction on private limited company to issue shares on premium.
Who is your CS? Tell him, he can talk to me. I will make him understand.
Thank you pawanji,
I have already started the process of issuing shares at face value. Hope that is not against the law. As of now I cant reverse the process by charging premium on the same.
Soon will get in touch.
Regards
Nishant
Is it against the Indian regulation to increase the paid up capital at face value?
Ours is a Indian registered company with 66.67% held by our foreign headquarters. We intend to increase the share capital however our local Director is not willing to top up his full share and has agreed to accept drop in his shareholding to 20%. So after capital injection the new shareholding will change from 66.67% foreign owned + 33.33% local owned to become 80% foreign owned + 20% local owned.
Directors would like to increase the share capital based on the face value but auditor claims it violated FEMA and RBI regulation.
Can you please enlighten on this matter?
CAclubindia
