Draft Resolution For Conversion of Loan Into Equity

Below is the draft resolution for quick reference, kindly modify according to the requirement

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CERTIFIED TRUE COPY OF THE RESOLUTION  PASSED BY THE SHAREHOLDERS OF …………………………. LIMITED ON ………………… AT THE REGISTERED OFFICE OF THE COMPANY # ……………………………………

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ITEM NO 1

To consider and if thought fit, to pass with or without modification(s), the following Resolution as Special Resolution.

“RESOLVED THAT pursuant to section 62(1A) and other applicable provisions of the Companies Act, 2013 and subject to all the necessary approvals, consents, permission and or sanctions of the Government of India and the enabling provisions of the Memorandum of Association and Articles of Association of the Company and subject to such conditions and modifications as may be prescribed or imposed by any  of them while granting such approvals, consents, permissions or  sanctions and which may be agreed to by the Board of Directors of the Company (herein referred as “the Board” which expression shall include any committee which may constitute to exercise  its powers including the powers conferred by this resolution), the consent and the approval of the Company  be and is hereby accorded to the Board and the Board  be and is hereby authorised in its  absolute discretion to offer , issue and allot  on preferential basis up to ………….. Equity shares of face value  Rs __/- each with a premium of  Rs. __/- each per share to the below shareholders

Sr. No.	Allottee	Number of Shares	Amount
1
2
3

RESOLVED THAT the purpose of this preferential issue is to convert unsecured loan to Equity Shares.

RESOLVED THAT the Board be and is hereby authorised to decide and approve the other terms and conditions of the issue and also vary, alter or modify any of the terms and conditions in the proposal as may be required by the agencies/ authorities involved in such issues but subject to such conditions prescribed by statutory authorities and as may be agreed by the Board.

RESOLVED THAT the Equity Shares to be so created, offered, issued and allotted shall be subject to provisions of the Memorandum and Association of the Company.

RESOLVED THAT the aforesaid Equity Shares shall rank pari passu in all respects with the existing equity shares of the Company including the Dividend.

RESOLVED FURTHER THAT for the purpose of creating, issuing  offering and allotting Equity Shares of the Company as aforesaid, the Board be and is hereby authorised to do and perform all acts, deeds, matters and things as it may, in its absolute discretion, deem necessary, expedite, desirable or appropriate to give effect to this resolution in all respects  and in  particular to settle any questions, difficulties or doubts that may arise in this regard to the offering, issuing, allotting and utilizing the issue proceeds of the Equity Shares of the Company, as it may, in its absolute discretion, deem proper and fit.

RESOLVED  FURTHER THAT the Board be and is hereby authorized at its discretion, any other member of the Board and Committee, to do all the necessary, deeds, matters, things as it may, in its absolute discretion, deem necessary, expedient, desirable or appropriate to give effect to this resolution”.

FOR ……………..

                                                                                   

NAME
DIRECTOR                                                                                                                                                                                                            

DIN

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Explanatory Statement sets out all material facts relating to the business mentioned under Item No. 1 of the accompanying Notice dated ……………

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ITEM 1 

a)        Objects of the Issue

The Company’s financials does not permit repayment of outstanding amount and  payment of interest on an ongoing basis, the Management of the Company has made arrangement whereby the outstanding amount payable from the promoter and the fellow subsidiary Company would be settled through converting the outstanding amount to Equity shares through preferential allotment.

The Board of Directors of the Company in its meeting held  on ……………….  have received the consent and confirmation from the above mentioned  …………………… for converting the  outstanding amount to Equity Shares of the Company. This allows the Company to carry out its operations smoothly as the Company would  not be required to discharge its liability by making the cash payment to this loan thereof to the ……………………. to the extent of  their conversion of loan to Equity Shares, which will in turn improve the performance / profitability in long run and also improve the current ratio of the Company. The unsecured loan is already utilised by the Company for the working capital requirements and also to avoid the adverse effect on the fund flow of the Company.

b)     Intention of Promoters/Directors/ key management persons to subscribe to the offer

 

None of the Directors and Key Management Persons are subscribing to the offer, except …………………………………………

 

c)      Issue price:

The issue price of Equity shares on preferential basis shall be   …………………..

 

d)     Shareholding pattern of promoters and others classes of shares before and after the offer

Post Shareholding

Sr. no	Shareholders	No of Shares	Percentage	No of Shares	Total Shares	% of Shares
1
2
3

 

 

e)      Whether a change in control is intended or expected.

 

There is no change in the Management control.

 

f)       The class or classes of persons to whom the allotment is proposed to be  made

Promoter 

 

g)      Proposed time within which the allotment shall be completed;

 

It is proposed to allot the shares within a year.

 

h)     Auditors Certificate

 

A copy of the Auditors Certificate  certifying that the issue of the said Equity Shares  are being made in accordance with these Rules.

 

None of the directors of the company are interested in the resolution except Mr. ……………… are being Directors and Shareholders concerned or interested in the proposed resolution.

                                                                             

Thanks & Regards,
CS Meetesh Shiroya