Sale of an asset in private ltd. co.

Pvt ltd 7492 views 2 replies

Y M Doshi

Chartered Accountant

148 Points Joined January 2011

Dear Experts,

I have a query as brief below; require your help to resolve the same.

Query:

1) Assessee is a Private Limited Company (limited by shares) having three Directors.

2) The Gross block of Fixed Assets includes one of the asset as "Wind Mill".

3) Company wants to Sale/Transfer "Wind Mill" to Son of the Director (Who is not a Director in the said Co.)

4) The Memorandum of Association permits the company to sell/transfer the asset at an agreed consideration.

Please help to understand,

1) Whether above transaction is allowed under the provisions of the Companies Act..?

2) What procedure is require to follow to process the above transaction? (Stamp duty etc. required to pay..?)

3) Any other statutory requirement needs to be taken care off ?

pl. help to resove the query.

Replies (2)

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

1) Sale of windmill may amount to sell or transfer of an undertaking of the company. However, being a private company, approval of members u/s 293(1)(a) is not required.

2) Being a private company, provisions relating to interested directors not participating in the discussions are also not applicable.

Hence company can go ahead with the transaction after passing Board resolution. For sale of windmill simple invoice will suffice. However for transfer of land (on which windmill is situated), sale deed will have to be registered after payment of appropriate stamp duty. Sale of windmill will require approval of appropriate regulating authority, (e.g. State Electricity Board) as per the agreed terms. Pl also check for permission of IT Deptt. u/s 281 of IT Act 1961.