Procedure of inventment in a pvt. ltd. company

Hi friends I am new here so please bear with me, here is situation, I am going to invest in a pvt. ltd. company of my friend which was formed in 2010 but not doing any major business activity till date. It has 2 founding shareholders as directors. They are also going to do a fresh investment into it. We deciced to investment equal amount of money and My wife will be appointed as one of the 2 director of the company. (one present director will resign), Now my questions is:

What is the more secure and better way for me to invest in it, as our accountant had suggested 2 options, one is buying the shares equal to the amount invested after calculating the per share value and second is that I can invest in it by giving a loan to director (my wife) at agreed rate of intrest and period thus without having any share in the company.

I want to know which is the better and secure option for me, giving loan or buying equity,

what the legalities involved.

Do I need to look into MOA & AOA of the company for this.

One thing more, me and my firend both are going to work together for the growth of company and also will exanpd in coming years.

Regards

As you mentioned that you and your friend is going to work for the growth of the Company, the Company is very likely to make good amount of profits. If you go for buying equal amount of equity. This will make give you right to have share in profits in the form of dividend.

Now lets see the case when you give loan to director. It will make you entitle to only fixed rate of interest. You wont be a shareholder of the Company.

Now the situation beneficial to you depends upon your vision about the growth of the Company. According to my perception you truly believe in the growth of Company making huge amount of profits. So you can go for buying equity of the Company.

When the Company allot shares to you it has to file Form 2 for allotment of shares. It should not be more than the authorized capital of the Company. The Company can file Form 5 to increase the authorized capital, if required. Your wife should obtain DIN number by filing DIN 1.

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