Shares issued in exchange for consideration other than cash can be created when a company issues shares for payment to sellers; or project proponents who have incurred provisional costs or insurers for payment of a signed commission, etc. Shares may be issued in exchange for consideration other than cash. Sellers, developers, insurers, etc., may be assigned shares instead of making payments. The review procedure in this context includes reviewing the contract, dissolving the steering committee, reviewing journal notes and reviewing the prospectus. An important aspect that you should keep in mind when issuing shares against other that cash is valuation. In this context, if one refers to the valuation, one hears (a) the valuation of the shares (if they are offered in exchange for a bonus) and b) the valuation of the services or assets on the basis of which those shares were awarded. Such a person cannot benefit from stock options for employees (since they are not „employees“ of the company). This is also a problem for developer directors. Promoter directors cannot receive ESOPs because, because of their controlling position in the company, they are not technically in the same category of people as workers. The issuance of shares against a consideration other than cash is therefore a viable alternative for these individuals. The company may award shares to insurers, developers or other special service organizations for payment of their compensation or for any costs they incur.
The verification procedure to be followed in such a case is as follows: a company may issue shares against a consideration other than cash. Common examples are the issuance of shares in exchange for real estate, assets that the company needs or (for example. B in one acquisition) of shares in another company. CA 2006, sec582 (1) provides that shares awarded by a company and any bonuses may be paid in cash or in monetary value (including value and know-how). If shares are issued in exchange for a scriptural consideration, it should be specified when the allowances are returned (form SH01) and provide the details of the consideration. For advice and advice when issuing shares for cash, please visit the Company Law Solutions website.