Dear Members,
Good Afternoon,
Whether shares in a private limited company can be transfered for cash?? Any case law available on the said query? I require to clear my doubt very urgently on the same
Mohammed (CS, Mcom, LLB) (852 Points)
06 March 2012Dear Members,
Good Afternoon,
Whether shares in a private limited company can be transfered for cash?? Any case law available on the said query? I require to clear my doubt very urgently on the same
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 06 March 2012
Why not? Case law will be needed when there is some interpretation issue in some provision.
Mohammed
(CS, Mcom, LLB)
(852 Points)
Replied 07 March 2012
Dear Mr. Agarwal,
My query was whether share can be transfered for cash?
And if there is any case law on it, can someone share the reference of it?
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 07 March 2012
Rule 8(3) of Unlisted Public Companies (Preferential Allotment) Rules 2003 as amended on 14.12.2011 reads as under:
"All monies payable on subscriptttion of securities shall be paid through cheque or demand draft or other banking channels, but not by cash."
Technically there is difference between 'subscriptttion' and 'purchase' and there seems to be no restriction on purchase of securities in cash in public company, though intention of the government is very clear to avoid cash transactions. Further, in case of private company there is no such restriction.
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