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Payment in kind

03 December 2020

like in partnership firm, a partner sometimes contributes towards his capital in kind,
can a shareholder do the same in a company?

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 04 December 2020

Yes. It is one of the SWM philosophies that shareholders do their best to protect their investment by protecting the business and that is why issuing shares is less riskier than debt as sole ownership is diluted after going public.

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Chirag (Professional) (1979 Points)
Replied 08 December 2020

Ya, But it's not straight forward like partnership while, the transaction to be approved by board and by shareholder ,also need to check that txn is falling under RPT? I can give you example, Suppose Mr. X is A shareholder and Director in a company ,Company want to buy his Mercedes As second hand for official purpose at say INR 40 Lacs, Now Director is Shareholder and also a RPT, So approval of board is required and Related Party Director will not participate in meeting ( Subject to exception that company is private and 90% holder are Friends /Family or OPC) then shares May be issued at CA certificate on FMV of shares and subsequently EOGM/AGM allotment can be final with all relevant details and filing Appropriate form and giving share certificates to director.