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CS Executive · Corporate Accounting and Financial Management · Accounting for Share Capital

Under the Companies Act, 2013, when a company proposes to issue further shares to persons other than existing equity shareholders for a consideration other than cash, which requirement applies?

A special resolution must authorise the issue, and the share price must be determined by the valuation report of a registered valuer. Section 62(1)(c) allows such issue to any persons for cash or other consideration, so an ordinary resolution or Board-only pricing is insufficient.

  1. AAuthorisation by a special resolution and price determined by the valuation report of a registered valuerCorrect
  2. BAuthorisation by an ordinary resolution and price fixed by the Board alone
  3. CPrior approval of the Tribunal and a valuation by the company's statutory auditor
  4. DOffer to existing shareholders only, with no valuation needed

Explanation

Section 62(1)(c) permits issue to any persons, for cash or consideration other than cash, if authorised by a special resolution and the price is determined by the valuation report of a registered valuer. An ordinary resolution or Board-only pricing does not meet this.

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