What is issue of shares for consideration other than cash?

When shares are issued against the purchase price, it is called ‘Issue of shares for consideration other than cash’. In other words cash is not received by the company against such shares. In this case shares are not issued to the public in general.

What is mean by issue of shares for consideration other than cash?

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’. In this case, shares are not open to the general public.

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’.

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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.

Can we do right issue for consideration other than cash?

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.

What do you mean by issue of shares?

Issue of Shares is the process in which companies allot new shares to shareholders. Shareholders can be either individuals or corporates. The company follows the rules prescribed by Companies Act 2013 while issuing the shares. … The process of creating new shares is known as Allocation or allotment.

Can shares be allotted for non cash consideration?

A company can issue shares for consideration other than cash. … If shares are issued for non-cash consideration, this must be stated on the return of allotments sent to Companies House (Form SH01) and details of the consideration must be supplied.

When premium amount is received on shares then it is credited to?

Premium received on issue of shares, is credited to share premium account but not to Profit and Loss account.

What is consideration in share transfer?

Answer. Firstly, the Consideration Paid is the amount the new Shareholder will pay in exchange for the shares. The Amount Paid, as recorded in ASIC, is the original value of the Shares when they were originally issued.

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What is a non-cash consideration?

Non-Cash Consideration means the Fair Market Value of non-cash consideration received by the Borrower or a Subsidiary in connection with an Asset Sale less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Non-Cash Consideration.

Can debentures be issued for consideration other than cash?

Issue of Debentures for Consideration other than Cash

Debentures can be issued for non-cash considerations. The company may have purchased assets from some vendors or acquired some other business. Then instead of paying cash, the company may issue debentures to such vendors.

Can a company 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.

Is right issue compulsory?

The rights issue does not require the approval of shareholders, and hence the board can proceed towards the issue. … File MGT – 14: After the passing of board resolution, the company must file the MGT -14 within 30 days of passing of the Board Resolution. The form MGT 14 is mandatory for a public limited company.

Why do companies issue right shares?

Why do companies offer rights issues? A company would offer a rights issue in order to raise capital. If current shareholders did choose to buy the additional shares, a company could use the funding to clear its debt obligations, acquire assets, or facilitate expansion without having to take out a loan from a bank.

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