Section 79

Laltu (MT) (25 Points)

19 April 2011

XYZ’ is a private co. whose face value of equity share is Rs.10/- each.
Shareholders at their meeting decided to issue some shares to promoter of
the company at Rs.1/- per share. The company is loss making company.

The Company satisfies all conditions stated under the Sec.79 except taking
Central Government approval/Company law Board.

1. Is it Central Government approval or Company law Board approval?
2. What is the procedure to obtain approval?
3. Is there any form through which I can apply for approval?

Regards

Laltu

Reply Follow

3 Replies

CS Shivi Reddy (COMPANY SECRETARY) (175 Points)
Replied 19 April 2011

Dear friend,
A Company may issue shares at a discount of a class alredy issued if the following conditions are fulfilled:
1. the issue of shares at a discount must be authorised by a special resolution and must be sanctioned by the central govt.

2. the resoultion spcifies the maximum rate of discount (not exceeding 10% or such higher % sanctioned by CLB)

(provided that no such resolution shall be sactioned by the CLB if the maximum rate of discount specified in the resolution exceeds 10% unless the CLB is of the opinion that a higher percentage of discount may be allowed in the special circumstances of the case)

3. not less than 1yr has at the date of issue elapsed since the date on which the Co. was entitled to commence business; and

4. the shares to be issued at a discount are issued within 2 months after the date on which the issue is sanctioned by the CLB or within such extended time as the CLB allows.

5. where the co. has passed a resolution authorising the issue, it may apply to the CLB for an order sanctioning the issue.

In my opinion in ur case also, CLB order is required.

It can be obtained by petition to the CLB, and the order obtained has to be filed with the Registrar in E- Form 21

1 Like

Jaideep (Service) (1363 Points)
Replied 20 April 2011

Agreed with Shivi...

Just want to add small point...while filing form 21, physical copy of form 21 and certified true copy of CLB order is also required to be submitted to concerned ROC.

Regards

Jaideep Pandya