In which circumstances do company issue shares for consideration other than cash?
Introduction. When an asset is acquired by a company, the payment of asset price can be made by the issue of shares or in cash to the vendor. Moreover, when shares are given against the purchase price, it is known as ‘Issue of shares for consideration other than cash’.
What is an example of issue of shares issued for consideration other than cash?
A company can issue shares for consideration other than cash. Common examples include issuing shares in return for property, assets the company needs or (e.g. in a takeover) shares in another company.
When shares are issued for consideration other than cash which account will be credited?
It may offer the fully paid equity shares to the vendor for the value of the assets. It can also issue shares to the promoters or the lawyers for rendering services in the formation of the company. It needs to show the ‘shares issued for consideration other than cash’ separately under the heading ‘Share Capital‘.
When a company issues shares to vendor of asset for consideration other than cash these are issued?
Under Section 75 of the Companies Act, 1956, issue of shares for consideration other than cash can be made by a company provided that they also file the relevant contract (such as contract for services, or for sale of assets) pursuant to which such allotment was made to the Registrar of Companies within thirty days of …
Can we issue shares without consideration?
The issue can be done only after at least one year of commencement of business and should be authorised by a Special Resolution specifying the number of shares, the current market price, consideration if any, and the class or classes of directors or employees to whom such equity shares are to be issued.
Can you issue shares for no consideration?
When a private UK company issues shares for non-cash consideration, there is no statutory requirement for the directors to obtain a formal valuation. … A private company can issue shares nil or partly paid, and then call for the balance of the issue price to be paid at a later date.
Can shares be issued for cash?
Issue of Shares for Cash. … They fulfill their requirement by issuing shares and debentures to the public. Moreover, after receiving the certificate of incorporation, they can offer shares to the public under different methods. In this article, we will discuss the issue of share for cash.
Can rights issue be done for consideration other than cash?
Any other person: A company can also issue the right shares to any other person by passing a Special Resolution either for cash or for consideration other than cash. However, the registered valuer determines the price of such shares by making a valuation report subject to prescribed conditions.
How many stages are there for shares issued for cash?
Shares issued for cash can be done in three stages as: (a) Application Stage, where applications were received along with application money; (b) Allotment Stage, where allotment takes place and allotment money is received subject to the receipt of minimum subscription; (c) Calls stage, where calls are made on shares …
Can shares be transferred for consideration other than cash?
According to section 62(1)(c) of the Act, a company can issue shares to any persons, if it is authorised by a special resolution, either for cash or for consideration other than cash, if the price of such shares is determined by the valuation report and any other conditions as may be prescribed.