TaxTMI 
TaxTMI 
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?
PROCEDURE FOR CONVERSION OF LOAN TO EQUITY
14 Feb 2020 
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Conversion of loan to equity may not be permissible where loan originated under prior companies law, expert says.
Conversion of a director/shareholder loan in a private limited company-originally taken under the Companies Act 1956 when MGT-14 was not applicable-was queried. The recorded expert reply states that direct conversion of such a loan into equity share capital is not possible, presented as an opinion and seeking further views; no procedural steps or statutory justification are provided. (AI Summary)
Conversion of a director/shareholder loan in a private limited company-originally taken under the Companies Act 1956 when MGT-14 was not applicable-was queried. The recorded expert reply states that direct conversion of such a loan into equity share capital is not possible, presented as an opinion and seeking further views; no procedural steps or statutory justification are provided. (AI Summary)
