Issue of Shares at Premium at incorporation.

Can a company issue shares at a premium at the time of incorporation to one subscriber and to others at a nominal value?
Will it be taxable under 56(2)vii ?
Replies (4)
Quick Summary
This discussion examines whether a company can issue shares at a premium to one subscriber and at nominal value to others during incorporation. It delves into the taxability under Section 56(2)(vii) and the provisions of the Companies Act 2013, which generally require shares to be fully paid up at incorporation. The thread also considers alternatives like private placement for angel investors after incorporation.

As per section 52 of the Companies Act 2013, a Company can issue the shares at premium towards the issue of un- issued shares of the Company to the members of the Company as fully paid up and further for writing off the preliminary expenses of the Company.

But practically, the no subscriber would take the shares on premium at very begining

Suppose we have an angel investor.. so can we issue shares at premium at premium.. and to other shareholder at face value..

is it compulsary that shares should be fully paid up at the time of incorporation?

Yes, it is compulsory for the Company to issue the fully paid up shares to the subscriber of the Company because suppose the money is received for 1000 shares of Rs. 10/-each which means Rs. 100000 value of shares, in that case such 100000 shares shall be deposited in Company's current bank account and as per the provisions of the Companies Act if the share are not allotted within 60 days of the application money, it shall be treated as deposit.

Subsequently after the incorporation of Company, the Company can issue the partly paid up share capital in respond to the total application money received either by the right issue or by way of private placement of shares

If subsequently after Incorporation a startup chose to issue shares to Angel Investor... Than it has to follow procedure for Private Placement and prepare the Financial Position, pass resolution and prepare Offer Letter...

hence to avoid this.. if we have an investor ready to invest...
Instead of Incorporating and than going for Private Placement.. will it be ok if we just Directly issue shares to one shareholder at Nominal Value and to the Other at the Premium Amount..

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