Question ID :
44976
243104
1.A small company want to convert its loan to sharecapital.no loan agreement was entered.
2.A new company want to issue shares to not existing shareholdders.whether valuation required in that case?
3.Please tell the procedure for debenture issue
Posted by
SINSH. M E
on
Apr 07, 2026
Filed Under
Companies Act, 2013
Conversion of loan into equity is permitted under Section 62(3) of the Companies Act, 2013, but there must be a pre-existing agreement (loan terms providing conversion option). If there is no loan agreement, technically speaking, the Section 62(3) benefit is not available. So by passing a board resolution, execute a fresh agreement having a clause for conversion of loan into share & take sharholders approval and issue shares.
2. Valuation is a must before issue of share to non exisitng shareholders.
3. Debentures are issed u/s 71 of the Companies. Please refer Companies (Share Capital & Debentures) Rules
Posted by
CA. SATISH CHAND GARG on
Apr 09, 2026