A Pvt. Company had taken loan from a Bank. In order to pay the Bank loan, a director who was acting as a guarantor sold his personal property and paid the loan. The Company converts the Directors loan into equity by issuing shares.
Now, the Company wants to reduce the share capital to the extent of equity share issued to the Director. Can it do so?
Point to be noted is that all the activity that has taken place is in the same F.Y. Can a Company convert its loan into equity and then further go for reduction of share capital in the same F.Y.?
