{"id":4935,"date":"2022-09-07T05:38:15","date_gmt":"2022-09-07T05:38:15","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=4935"},"modified":"2022-09-07T05:38:15","modified_gmt":"2022-09-07T05:38:15","slug":"process-of-conversion-of-loan-into-equity-share-are-possible","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/","title":{"rendered":"Process of Conversion of Loan into Equity Share are possible"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4936\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible..jpg\" alt=\"conversion of loan into equity\" width=\"1092\" height=\"480\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible..jpg 1092w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible.-300x132.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible.-1024x450.jpg 1024w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible.-768x338.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/Process-of-Conversion-of-Loan-into-Equity-Share-are-possible.-800x352.jpg 800w\" sizes=\"(max-width: 1092px) 100vw, 1092px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d04ea139853\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d04ea139853\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#Process_of_Conversion_of_Loan_into_Equity_Share_are_possible_under_Companies_Act\" title=\"Process of Conversion of Loan into Equity Share are possible under Companies Act.\">Process of Conversion of Loan into Equity Share are possible under Companies Act.<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#Benefits_of_the_conversion_of_the_loan_into_Equity_Shares\" title=\"Benefits of the conversion of the loan into Equity Shares:\">Benefits of the conversion of the loan into Equity Shares:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#RELEVANT_UNDER_SECTION-_62_3_OF_THE_COMPANIES_ACT_2013\" title=\"RELEVANT UNDER SECTION- 62 (3) OF THE COMPANIES ACT, 2013\">RELEVANT UNDER SECTION- 62 (3) OF THE COMPANIES ACT, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#PROCEDURE_FOR_CONVERSION_OF_LOAN_INTO_EQUITY\" title=\"PROCEDURE FOR CONVERSION OF LOAN INTO EQUITY\">PROCEDURE FOR CONVERSION OF LOAN INTO EQUITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#Hold_Extra_Ordinary_General_Meeting\" title=\"Hold Extra Ordinary General Meeting \">Hold Extra Ordinary General Meeting <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/process-of-conversion-of-loan-into-equity-share-are-possible\/#Dont_Forget_to_Attach_the_below_mentioned_attachment_into_Forms\" title=\"Don\u2019t Forget to Attach the below mentioned attachment into Forms: \">Don\u2019t Forget to Attach the below mentioned attachment into Forms: <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Process_of_Conversion_of_Loan_into_Equity_Share_are_possible_under_Companies_Act\"><\/span><span style=\"color: #000080;\"><strong>Process of Conversion of Loan into Equity Share are possible under Companies Act.<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A company are allowed to go under conversion of the loan into equity in accordance to the loan agreement, where in the section of paying the process of the debt it was mentioned.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Benefits_of_the_conversion_of_the_loan_into_Equity_Shares\"><\/span><span style=\"color: #000080;\"><strong>Benefits of the conversion of the loan into Equity Shares:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>You are not required to exchange cash while the conversion debt to equity.<\/li>\n<li>The conversion also helps in reducing debt and also increase the funding of shareholders which improves the balance sheet.<\/li>\n<li>In this process money lender convert the amount (reflects outstanding) into equity. Without any transfer of actual cash but equity is kind of money which is invested by the shareholders in the company.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"RELEVANT_UNDER_SECTION-_62_3_OF_THE_COMPANIES_ACT_2013\"><\/span><span style=\"color: #000080;\"><strong>RELEVANT UNDER SECTION- 62 (3) OF THE COMPANIES ACT, 2013<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>For the increment of the subscribed capital of any company there is nothing mentioned in this section but caused the loan borrowed by the company which is converted into equity share of the company.<\/li>\n<li>Assuming that a special resolution adopted by the company&#8217;s general meeting approved the terms of the issuing of such debentures or the loan raising before the issuance of such debentures or the raising of loan.<\/li>\n<li>As a result, it is important to remember that the loan was accepted by the company with the understanding that it would eventually be converted into equity.<\/li>\n<li>There should be special resolution which must be passed for this type of loan under which conversion is possible.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"PROCEDURE_FOR_CONVERSION_OF_LOAN_INTO_EQUITY\"><\/span><span style=\"color: #000080;\"><strong>PROCEDURE FOR CONVERSION OF LOAN INTO EQUITY<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-4937\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/PROCEDURE-FOR-CONVERSION-OF-LOAN-INTO-EQUITY..jpg\" alt=\"PROCEDURE FOR CONVERSION OF LOAN INTO EQUITY.\" width=\"957\" height=\"382\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/PROCEDURE-FOR-CONVERSION-OF-LOAN-INTO-EQUITY..jpg 318w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/09\/PROCEDURE-FOR-CONVERSION-OF-LOAN-INTO-EQUITY.-300x120.jpg 300w\" sizes=\"(max-width: 957px) 100vw, 957px\" \/><\/p>\n<p>Follow steps for the conversion of the Loan into Equity shares.<\/p>\n<ul>\n<li><strong>Hold a board meeting<\/strong>\u2014 A company have to conduct a board meeting by giving notice for the meeting before 1 week for this particular agenda.<\/li>\n<li>Resolution for loan acceptance<\/li>\n<li>The Resolution for loan conversion to equity<\/li>\n<li>Publication of a notice convening an Extraordinary General Meeting.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Hold_Extra_Ordinary_General_Meeting\"><\/span><strong><span style=\"color: #000080;\">Hold Extra Ordinary General Meeting<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It can be conducted after issuance of the notice before 21 days or even shorter if necessary, conveying the Extraordinary General Meeting to approve the conversion of loan into Equity<strong>.<\/strong><\/p>\n<ul>\n<li>Submitting e-Form MGT-14 within 30 days after the special resolutions passed.<\/li>\n<li>The company must enter into a loan agreement with the lender that specifies the terms and conditions for converting the loan into equity.<\/li>\n<li>Hold a second board meeting in between 7 days&#8217; after notice passes a resolution for allotment on loan conversion into equity.<\/li>\n<li>Completing Filling e-Form PAS-3 within 30 days after the resolutions get passed.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Forget_to_Attach_the_below_mentioned_attachment_into_Forms\"><\/span><strong><span style=\"color: #000080;\">Don\u2019t Forget to Attach the below mentioned attachment into Forms:<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>MGT-14: <\/strong><\/span><\/p>\n<ul>\n<li>Notice of the Extra General Meeting Conducted with statement of explanation.<\/li>\n<li>A copy of certification of the resolution passed through an Extra ordinary general meeting.<\/li>\n<li>Loan agreement (Optional)<\/li>\n<\/ul>\n<p><strong><span style=\"color: #000080;\">PAS-3:<\/span> <\/strong><\/p>\n<ul>\n<li>Board resolution for allotment of equity for conversion of loan into equity.<\/li>\n<li>List Allotees.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Process of Conversion of Loan into Equity Share are possible under Companies Act. A company are allowed to go under conversion of the loan into equity in accordance to the loan agreement, where in the section of paying the process of the debt it was mentioned. Benefits of the conversion of the loan into Equity &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[647],"tags":[887],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4935"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=4935"}],"version-history":[{"count":2,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4935\/revisions"}],"predecessor-version":[{"id":4939,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4935\/revisions\/4939"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=4935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=4935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=4935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}