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Allotment of shares in pvt. ltd. company

Postby HinnaGarg » Fri Nov 20, 2009 11:07 am

Hi

In a private limited Company, if we want to allot shares to the new person (Instead of exisitng members) then what is the procedure and which section should be referred for the same?


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Re: Allotment of shares in pvt. ltd. company

Postby csrekha » Fri Nov 20, 2009 11:13 am

Please refer Section 81 (1A) of the Companies Act, 1956. A pvt. Co. can issue shares on preferential basis to persons other than its existing shareholders by passing a special resolution in general meeting to that effect.

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Last edited by csrekha on Fri Nov 20, 2009 11:14 am, edited 1 time in total.
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Re: Allotment of shares in pvt. ltd. company

Postby suresh_cs » Fri Nov 20, 2009 11:13 am

you may mention relevanat article of AoA, if any. No need to mention any section.

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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Fri Nov 20, 2009 11:15 am

Hi


Provisions of Section 81 including 81 (1A) are not applicable to private limited company.


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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Fri Nov 20, 2009 11:23 am

Hi

i want to know the following:

1. Whether Permission in General Meeting is required to allot further shares to new member?

2. If the following things in the AOA are written like: Article No. 2.1 "The Directors may increase the share capital of the Company by ordinary resolution in GM by such sum to be divided into shares of such amount and of such classes with such rights and privileges attached thereto as GM shall direct." and in Article no. 3 it s writen that Directors may allot shares to such persons on such terms and conditions as they may think fit and also the allotment of shares shall be made in the Board meeting only." According to me Article 2.1 deals with Authorised Share Capital and Article 3 deals with paid up capital i.e. allotment of further shares. In this context, tell me the procedure to be followed for allotment of shares to new person?


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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Fri Nov 20, 2009 12:33 pm

reply
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Re: Allotment of shares in pvt. ltd. company

Postby king » Fri Nov 20, 2009 12:37 pm

I think srinvasaraghavan sir is the best person to answer this query.

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Re: Allotment of shares in pvt. ltd. company

Postby srinivasaraghavan » Fri Nov 20, 2009 3:45 pm

1.In the case of a private limited company the matters of further issue is normally protected by appropriate clauses in the AOA. If AOA is silent, then it leaves the existing shareholders un protected as regards maintaining the interse shareholding if further issue is made by the Board in accordance with their decision (of course within the authorised capital), as section 81 totally inapplicable to private limited companies.

2. If the AOA has clauses:
Article No. 2.1: "The Directors may increase the share capital of the Company by ordinary resolution in GM by such sum to be divided into shares of such amount and of such classes with such rights and privileges attached thereto as GM shall direct."

Article No. 3: "Directors may allot shares to such persons on such terms and conditions as they may think fit and also the allotment of shares shall be made in the Board meeting only."

In such a case, Article 2.1 deals with further issue of Share Capital and Article 3 deals with allotment of shares so issued.
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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Fri Nov 20, 2009 5:40 pm

Dear Sir

Please tell me the procedure to be followed as the AOA of the company contains the aboce two clauses.



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Re: Allotment of shares in pvt. ltd. company

Postby pca » Sat Nov 21, 2009 11:02 am

1. Take share application forms duly signed alongwith share application money.
2. Pass Board resolution for allotment of shares (Ensure that the no. of members does not exceed 50)
3. File Form 2 with ROC
4. Issue share certificates after paying stamp duty
5. Make entry in register of members
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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Sat Nov 21, 2009 11:22 am

Dear Sir

You mean to say that we dont need to call any general meeting? Then What does Article 2.1 conveys?

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Hinna Garg
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Re: Allotment of shares in pvt. ltd. company

Postby pca » Sat Nov 21, 2009 11:45 am

Article 2.1 is for increase in authorised share capital of the company.
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Re: Allotment of shares in pvt. ltd. company

Postby cs_vbkondalkar » Sat Nov 21, 2009 8:54 pm

Dear All

I hope Suman Khuran's query have been properly addressed by Modiators, mam procedure has also given in proper way.

Please dont get confused in Article 2.1 which is for increase of authorised capital.

You can pass a Board Resolution as per your articles and file the form and do the rest of the formalities.

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Re: Allotment of shares in pvt. ltd. company

Postby suman khurana » Thu Nov 26, 2009 3:02 pm

Thanks to all
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Re: Allotment of shares in public. ltd. company

Postby mahendra dutia » Fri Nov 27, 2009 5:16 pm

Now say, in place of a private limited co., its a closely-held public limited company. The company increases its Authorized Share Capital and immediately proceeds to accept application for allotment of further shares, which is beyond its existing Autho... Capital. It is yet to file form 23 and form 5. My questions are:- 1) Whether the company is lawfully right to accept applications for allotment of further shares without passing resolution in a general meeting under Sec 81(1A)? 2) How long can the application money be kept on hold before making allotment? 3) Whether a "statement in lieu of prospectus" would be required to be filed with the ROC, before making allotment? FRIENDS PLEASE RESPOND. THANKS!
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Re: Allotment of shares in pvt. ltd. company

Postby cs_vbkondalkar » Fri Nov 27, 2009 8:42 pm

Boss,

Once the Resolution has been passed of Increase of Authorised Capital you can proceed, but in your case being a Limited Company unless the Board have the authority to accept the money as Share Application Money you can not accept the money U/s. 81(1A), please clarify to number of person your are going to issue and allot the shares.
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