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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Equity and Procedural Aspects - Public Funding

Arvind Pharma Ltd, an unlisted public company, wants to issue shares for a non-cash consideration (acquiring a patent) to a technology partner, who is not an existing shareholder. Which combination satisfies section 62(1)(c) of the Companies Act, 2013?

A special resolution is needed, and the share price must be determined by a registered valuer's valuation report, subject to Chapter III and prescribed conditions. Board approval alone, an ordinary resolution or a price agreed between parties does not satisfy section 62(1)(c).

  1. ABoard resolution alone, with price fixed by the Board
  2. BOrdinary resolution, with price set by the company's auditor
  3. CSpecial resolution, with price determined by the valuation report of a registered valuer, subject to Chapter III compliance and prescribed conditionsCorrect
  4. DSpecial resolution, with price fixed by the partner and the company by mutual agreement

Explanation

Section 62(1)(c) allows issue to any persons, for cash or other consideration, if authorised by a special resolution and the price is determined by a registered valuer's valuation report, subject to applicable Chapter III provisions and prescribed conditions. Board-only, ordinary resolution or agreed price do not meet this.

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