Conversion of LOAN into SHARES

[bhavani prasad]

Dear all

Is there any possibility of conversion of LOAN to PREFERENCE SHARES.

Please share your views.
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CS  Bhavani Prasad C N
Company Secretary & Compliance officer
Neha International Ltd
501,Manbhum Jade Towers
Rajbhavan Road
Somajiguda
Hyderabad 500 082
Tel:+91  040 66 13 45 79
Fax:+91 040 66 13 64 35
Website:www.nehainternational.com
Mail: bhavan...@nehainternational.com

[CS.Alagar]

Yes it can be converted into preference shares. Also there are views even it can considered as allotment towards consideration of cash. There is a clarification from the department on the captioned subject.

On Tue, Dec 22, 2009 at 9:49 PM, CS.Alagar <alag...@gmail.com> wrote:

Yes it can be converted into preference shares. Also there are views even it can considered as allotment towards consideration of cash. There is a clarification from the department on the captioned subject.

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Thanks & Regards
Alagar
Team Genicon
Corporate Secretarial & Legal, FEMA, SEBI & Indirect Taxation
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Thanks & Regards
Alagar
Team Genicon
Corporate Secretarial & Legal, FEMA, SEBI & Indirect Taxation
Mobile: 91-90031 99947
Email:alagar@geniconsolutions
Web: geniconsolutions.com

[CS.Alagar]

yes it can be converted into preference shares. Also there are views even it can considered as allotment towards consideration of cash. There is a clarification from the department on the captioned subjec

On Tue, Dec 22, 2009 at 4:37 PM, bhavani prasad <bhavanip...@gmail.com> wrote:

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[bhavani prasad]

Alagar

Thanks for your mail.Can you please post the clarification in this regard

Thanks in advance.

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[CS.Alagar]

For your reference

 

Department Clarification:

 

Clarification given by the Department of Company Affairs vide Circular No.8/32/(75) 77-CL-V, dated March 13, 1978 is as follows:-

 

“I am directed to refer to this Department’s Circular Letter No. 8/4/69, dated 18-11-1969 and to say that the views conveyed therein have since been re-examined. The Department is now of the view that the allotment of shares by a Company to a person in lieu of a genuine debt due to him is in perfect compliance of the provisions of section 75 (1). In this connection it is clarified that the act of handing over cash to the allottee of shares by a Company in payment of the debt and the allottee in turn returning the same cash as payment for the shares allotted to him is not necessary for treating the shares as having been allotted for cash. What is required is to ensure that the genuine debt payable by a Company is liquidated to the extent of the value of the shares.

[Vivek Hegde]

Thanks Mr Alagar. In addition also find enclosed a snap from a Book of an expert author.

 

Regards

 

Vivek

 

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 9019756940

[Ramavtar Goyal]

Dear bhavani,

 

yes we can convert the loan into pref shares and DCA guidelines also be there. but loan should be existed as on date of conversion.

 

regards

 

Ramavtar goyal

[aarohi desai]

Dear all

Is it possibility to convertf LOAN from private Company to PREFERENCE SHARES?????

Companies Act allow?

[CS_SrikanthReddyKolli]

hi

what about compliance with Companies Act, 2013?

Sec 62(3) says that the terms of loan shall contain the option for converting to shares and such terms shall be approved before the obtaining loan by a special resolution in general meeting.

can the department circulars issued before the new Companies Act, 2013 are valid now against the provisions of CA 2013