Transfer of land to the company
Advocate Ravinder
(Querist) 13 June 2015
This query is : Resolved
Mr. X, his wife Y and his friend Z are the directors in a private limited company, X has 50% share, Y has 20% share and Z has 30% share in the company. Now Mr. X wants to transfer his personal immovable property i.e. open land of Ac. 3.00 gts in Telangana state (Non Agriculture) in favour of the company. Mr.X wants to put the property as stock in trade. Mr. X intention is to avoid Registration charges. Is there any method to transfer his land into the company name. I came to know that simple letter stating that Mr.X is handing over the possession by way of stock in trade is enough. Is it correct. Or is there any other way to avoid egistration/development charges. I request my learned friends opinion.
DR.VEDULA GOPINATH
(Expert) 14 June 2015
Private Limited company is having distinctive personality and identity which is different from its directors and promoters.
Better you enter into an agreement ACQUISITION OF FIXED ASSERTS AND CONSIDERATION PAID OTHER THAN CASH.The land value you can take in the form of shares.
In the company law precedents, the promoter can transfer his own property to the company but he should fairly disclose the value and profit he makes out of it.
The said agreement can be registered with the Sub-Registrar of Assurances. To repeat that particular agreement which is entered into with the Company only need be registered and NOT the conveyance of property under TP Act.
Later in the audited accounts, the auditor shall take it as fixed asset of the company with a notation as required under co.law and audit rules.
After the above transaction, the company is free to deal with the property.
Also it is safe to give a public notice befodre entering into the aforesaid agreement.
dr vedula gopinath advocate/arbitrator
Dr J C Vashista
(Expert) 14 June 2015
I agree with the expert advise of Dr. Vedula Gopinath, Advocate/Arbitrator to a great extent.
1. However, since the land (intended to be transferred to the private limited company) shall form part of its capital in consequence of the transfer transaction, it has "some" value which is to be accounted for and the profits of the same to be shared by whom and in what proportion?
2. What about payment of the consideration for the land?
3. Is there any clause in the partnership deed/Memorandum of Association/Articles of Association where such assets can be acquired after commencement of its operation/business? What is the mode of such acquisition?
4. Since it is transfer of title of the property it is liable to be compulsory registration vis-Ã -vis payment of stamp duty, i.e. , can and should not avoid.
5. Seek professional opinion, advise and guidance from a local lawyer.
Rajendra K Goyal
(Expert) 14 June 2015
Better transfer the rights in the name of the company through registered deed.
Anirudh
(Expert) 14 June 2015
It is not clear what the Private Limited Company is going to do with the land?
There are several facts, which is not coming out in the open, for obvious reasons.
Without the complete facts / information, whatever views are given here will not serve the purpose, rather it will land in other problems, like capital gain in Income Tax etc.
