Issue of shares to minor
hetalsangoi
(Querist) 23 September 2012
This query is : Resolved
my uncle wants issue fully paid up shares to the minor child of his brother through its guardian.
can private co do it?
is company act allow?
how income tax see this issue?
Tajobsindia
(Expert) 20 October 2012
"Educated investor is a protected investor"
1. Issuance of fully paid shares to Minor through allotment is not possible. However you may do so by making allotment in the name of guardian of minor for minor.
2. Guardian of minor will be liable for payment of call money or to fulfill any other responsibility arising out of allotment.
3. There will be no violation of laws so far register of member name would appear in the manner such as “Minor’s name (Acting through his guardian name)”
4. If the income is deferred and not received during the minority period of the child, then such income is not to be clubbed with guardian. Thus it is wise to invest money in flats, building or plot of land, purchase jewellery, ornaments or silver utensils, Deposit the money in PPF, invest in tax-free securities and bonds, invest in shares and investment, wherefrom the income is deferred, beyond the minority of the child.
5. Further, the Hon’ble Supreme Court had pronounced that on the attainment of majority by the minor, the accumulated fund cannot be included in the income of the parent, since on the date of receipt; the receipt is no longer a minor. However, the accumulated income will be chargeable to tax on its receipt in the hands of child, who will become major at the time of receiving the amount.
