{"id":341,"date":"2020-09-26T04:49:00","date_gmt":"2020-09-26T04:49:00","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=341"},"modified":"2020-09-29T05:23:17","modified_gmt":"2020-09-29T05:23:17","slug":"issue-of-shares-at-discount-and-recent-amendments","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/issue-of-shares-at-discount-and-recent-amendments\/","title":{"rendered":"Issue of shares at Discount & Recent Amendments"},"content":{"rendered":"\n

Provisions related to issue of shares at discount are contained in section 53 of Companies Act, 2013. As per the provisions of said section, a company is not allowed<\/em><\/strong> to issue shares at discount.<\/p>\n\n\n\n

As per the provisions contained in the section, any shares which are issued by acompany at a discounted price shall be void.<\/em><\/strong><\/p>\n\n\n\n

\"discount-recent-amendments\"<\/figure>\n\n\n\n

However, there are certain exceptions to the above said provision which are enlisted here under:<\/p>\n\n\n\n

1.<\/strong> Issue of sweat equity shares<\/strong><\/p>\n\n\n\n

As per section 2(88)<\/strong> of the Companies Act, 2013, sweat equity shares are the shares issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions.<\/p>\n\n\n\n

And a company shall be allowed to make issue of such shares at a discount.<\/p>\n\n\n\n

Reason why issue of sweat equity shares is allowed to be done at discount?<\/strong><\/p>\n\n\n\n

The simple reason for this is that, these shares are in the form of reward to directors, employees. And there shall be no reward if shares are not issued at a discount to them, therefore, the Companies Act, 2013 has permitted the issue of sweat equity shares at a discount.<\/p>\n\n\n\n

2.<\/strong> Issue of shares at a discount by a company to its creditors when its debt is converted into shares<\/strong> in pursuance of any statutory resolution plan<\/strong> or debt restructuring scheme<\/strong> in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.<\/p>\n\n\n\n

This sub-section was inserted by the Companies Act, 2013 by the Companies Amendment Act, 2017 which was made effective from 09th<\/sup> February, 2018.<\/p>\n\n\n\n

By this amendment, an opportunity is given to the creditors for conversion of their debt in into equity shares at a discount under any statutory resolution plan as in the case of Insolvency & Bankruptcy Code, 2016 or any other debt restructuring scheme. This has reduced the hardships of insolvent entities and they can revive their entities in an easy manner.<\/p>\n\n\n\n

Penalty for non-compliance of Section 53<\/strong><\/p>\n\n\n\n

\"non-compliance-of-section-53\"<\/figure>\n\n\n\n

This content is meant for information only and should not be considered as an advice or legal  opinion, or otherwise. AKGVG & Associates <\/a>does not intend to advertise its services through this.<\/strong><\/p>\n\n\n\n

Posted by:<\/p>\n\n\n\n

CS Neetu Saini<\/p>\n\n\n\n

AKGVG & Associates<\/p>\n","protected":false},"excerpt":{"rendered":"

Provisions related to issue of shares at discount are contained in section 53 of Companies Act, 2013. As per the provisions of said section, a company is not allowed to issue shares at discount. As per the provisions contained in the section, any shares which are issued by acompany at a discounted price shall be…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120],"tags":[184,185,187,186],"class_list":["post-341","post","type-post","status-publish","format-standard","hentry","category-secretarial-services","tag-issue-of-shares-at-discount","tag-meaning-of-issue-of-shares-at-discount","tag-sec-53-of-company-act","tag-section-53-of-companies-act-2013"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=341"}],"version-history":[{"count":2,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/341\/revisions"}],"predecessor-version":[{"id":346,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/341\/revisions\/346"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}