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V.S. Datey on Companies Act, 2013
  • Allotment of shares

    by amol on Thursday, July 23, 2020 at 01:12 PM

    there was a circular which stated that if company issues shares for debt payable then it will ballotment for cash it was not necessary to give the money and take same back and then allot shares the circular was under 75 of old act whether sameclarification which was under 1956 act stii holding good

    Replied byV.S. Datey Friday, July 24, 2020 at 09:04 AM

    still valid Allotment of shares to a person in lieu of a genuine debt by mutual consent will be treated as payment in cash. [It will not be treated as ‘payment other than by cash'] – Department circular No. 8/32(75)/77-CL-V dated 13.3.1978. [Earlier contrary circular dated 18.11.1969 was rescinded]. In old British Spargo’s case (1873) LR 8 Ch 407, it was held that allotment of shares by adjusting debt due is ‘allotment for cash’. This view has been accepted by ICAI - see ‘Compendium of Statements and Standards of Auditing’ by ICAI. V S Datey

 
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