Hi, I am director in a private limited company planning to accept loan from shareholders of the company. We have to file a copy of special resolution passed at the extra ordinary general board meeting along with explanatory statement U/S 102 of the companies act, 2013. I have following questions: 1) Do we have to attach any other documents like loan agreement between the company and the shareholders along with the resolution in MGT-14 ? 2) Do we have to wait for MGT-14 to be approved before actually accepting the loan ? 3) How long does it take in general for MGT-14 approval ? 4) Do we need to have a separate term sheet along with loan agreement or the agreement itself should include all the terms ? 5) Do we need to register the loan agreement ?
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1)you have to File MGT-14 with Registrar within 30 days of passing of Special Resolution.
2)Attachments:
Notice of General Meeting along with Explanatory Statement.
Certified True copy of Special Resolution.
Minutes of General Meeting
3) you dont have to enclose loan agreement between company and share holders
4)your CA can guide you as to time taken for MGT - 14 approval
5) loan agreement should contain all terms and conditions
6) register the loan agreement
PRIVATE COMPANIES are now exempt from filing resolutions listed in Section 179(3) and Rule 8 of Chapter XII Rules. Hence private companies will no longer be required to file MGT-14 for prescribed matters taken up at its Board Meetings.
The process to convert the loan into share capital is given under Section 62(3) of the Companies Act, 2013. The conversion of loan into share capital is an easy & practical method to raise capital without immediate investments.
Section 62(3) of the Companies Act, 2013 reads as follows-
“62. A further issue of share capital.
(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company:
Provided that the terms of the issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of the loan by a special resolution passed by the company in general meeting.”
Sec 62(3) of the Act states if a company takes a loan on the term that loan will be converted into share capital & such an option have been approved before raising of the loan by a special resolution, subscribed capital can be increased.
Procedure for conversion of loan into shares:
Approve terms of loan by passing special resolution before taking of loan & file special resolution in E-Form MGT14 within 30 days.
Convert loan into shares by passing resolution in Board Meeting & File Eform PAS3 for allotment of shares within 30 days.
iii. Also issue share certificate by passing Board resolution & file Eform MGT 14 within 30 days for issue of shares
2. the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;
3. Read the above answer.
4. Read the provisions of section 62 (3) of the company acts for detailed procedure to be adopted.
5. It is not necessary.
1. Along with the resolution you have to attach the notice of general meeting of the company along with minutes of general meeting. The loan agreement entered into between the company and share holders is not to be attached.
2. The loan agreement should be registered.
Dear Client,
A company has to file with the concerned RoC certain resolutions and agreements. These are to be filed after being passed at the meeting of the Board / Shareholders / Creditors of the company
MGT-14 is required to be filed pursuant to Section 94(1), 117(1) of the Companies Act, 2013 and Section 192 of the Companies Act, 1956.
The agreement, if, dealt in the EOGM, than that also by abiding sec 102 ( 3) of the Act.
Also Resolutions to be filed with form MGT.14 - to borrow monies;
Read more at: https://www.caclubindia.com/articles/list-of-resolutions-to-be-filed-with-roc-in-form-mgt-14-20664.asp
) Do we have to attach any other documents like loan agreement between the company and the shareholders along with the resolution in MGT-14 ? - If discuss in General Meeting.
2) Do we have to wait for MGT-14 to be approved before actually accepting the loan ? - If, no penalty clause on rejection of MGT-14, no issue. But until its not approved by ROC, not legal to accept.
3) How long does it take in general for MGT-14 approval ? -- Depends on work load and state to state ROC.
4) Do we need to have a separate term sheet along with loan agreement or the agreement itself should include all the terms ? -
5) Do we need to register the loan agreement ? - If discussed in EOGM.
1. yes, if there is any.
2. yes.
3. i dont have an idea.
4.preferably so because it would help shareholders understand terms better.
5.i think no.
Hello Everyone, Thanks for your responses. The eForm has been filed now with following attachments: a) Special Resolution b) Meeting Minutes c) Explanatory Notes I have following queries in relation to the filing of MGT-14: 1) One answer above says "PRIVATE COMPANIES are now exempt from filing resolutions listed in Section 179(3) and Rule 8 of Chapter XII Rules. Hence private companies will no longer be required to file MGT-14 for prescribed matters taken up at its Board Meetings." ---- So was this filing optional ? 2) After filing I have received an auto-generated message "This is to inform you that the eForm MGT-14 submitted on the MCA portal in respect of vide SRN XXXXXXXX dated XX/XX/XXXX has been taken on file in a straight through process." ---- Does it mean the eForm MGT-14 has been approved ? 3) If the eForm MGT-14 is not yet approved then how to check if the eForm has been approved or not ? Is there a status tracking mechanism ?
it implies that e form MGT -14 has been taken on record
2) if private companies are exempt from filing resolutions listed under section 179(3)then it was not necessary for you to file MGT-14
1. As per the provisions of the referred law, the filing of resolution is not mandatory.
2. It cannot be taken as eform MGT - 14 has been approved on filing, it will undergo process of verification to its correctness and then only the orders will be passed.
3. You will get a tracking number to track the status or you can visit the sit for enquiry and clarification or you will get notice seeking clarification.
A notification made on 05th June 2015 notified the exemptions for private companies from certain provisions of the Companies Act 2013.
These exemptions made available through the notification are related to the following provisions:
Related party transactions
Share capital, Public deposits , Meeting Requirements, Agreements and resolutions, The auditor eligibility,
Directors, Power of the board, Senior Management Appointment.
Section 117 (3)(g) of the Companies Act of 2013, the companies are needed to file copies of Board Resolutions passed in certain matters connected with 179(3) of the Act with the Registrar of Companies.
Consequently, the resolutions connected with making calls on the unpaid shares, security buy back authorization, the issuance of securities and debentures, company’s fund investment, granting of loans, the guarantee or security for loans, the financial statement approval diversification, the acquisition or the takeover of another company and any other matters with regard to Rule 8 of the amended Companies (Meetings of Board and its Powers) Rules, 2014 are not required to file with ROC.
Not approved but admitted.
Exemption is granted vide notification, so I insist to withdraw and go ahead with loan.