New Director joining with new capital in existing Pvt Ltd Company

Hi,

A pvt limited company started with 5 Lakh authorized capital, and 1 Lakh paid up capital. The company started with only 2 directors who invested 90,000 and 10,000 respectively and hence hold 90% and 10% shares since the start.

Now, after two years of successful business, a third director wants to join by investing 5 Lakh Rupees.

How will the new share ownership be decided among the three directors in this case?

Since during the 2 years of successful business, the company has say 20 Lakhs in its bank account (or in other assets).

1) With the new applicant director willing to join with 5Lakh capital, how many shares (in %) will all three directors-cum-shareholders have?

2) How will authorized capital and paid up capital be changed? Will it be 20 Lakhs (or 20 + new 5 =25 lakhs) for paid-up capital, or 20Lakhs (or 25 lakhs) for authorized capital, or will they remain same as earlier?

 

 

Thank you.

Replies (2)
Quick Summary
A private limited company with existing directors and shareholding is considering a new director who wishes to invest capital. The discussion explores how this new investment will affect the share ownership percentages among all three directors. It also queries the implications for the company's authorised and paid-up capital, considering the company's growth and accumulated assets.

Thanks a lot for the reply.

However, as the company is running successfully since last 2 years, the value of the company will increase. In the question, it is assumed to be 20 Lakhs.

So my understanding is that when the new Director joins, he will be allotted shares at new market value, instead of that at the face value which was at the time of starting the company. In that case, the number of shares allotted to new Director will be considerably less (shouldn't it?), and hence the share percentage of the new director should also be less?

 

Or am I missing anything here, please?

Thanks again.

But I was actually looking for the answer as per the rules.

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