PROCEDURE FOR CONVERSION OF LOAN TO EQUITY

[VENKAT S]

In case of loan taken from director shareholder in a private limited , what is the procedure to be followed to convert it to equity share capital. The loan was obtained under Companies Act 1956 hence MGT-14 was not applicable at that time. Can the company directly convert such loan now?

AI Summary

Conversion of Director-Shareholder Loan to Equity in Private Firm Under Companies Act 1956 Deemed Impossible A query was raised about the procedure for converting a loan taken from a director-shareholder in a private limited company into equity share capital. The loan was obtained under the Companies Act 1956, making MGT-14 inapplicable at that time. The question was whether the company can now directly convert the loan to equity. The response provided suggested that it is not possible to do so, although other opinions were invited for further clarification.