We 4 people are planning to purchase a land to build up a company.let me name the 4 as A,B,C,D
A and B are share holders and directors. C and D are Directors. .A is bringing his share as liquid cash.B is bringing his share in the form of land.C owns a land which is suitable for our need.is it fair enough if the proposed company get the land from C by signing a sale deed by issuing a cheque from company and then C to transfer it to B and then he brings the money as his share.Please advise.
please advise a best way to have the land registered on companys name.
Asked 3 years ago in Property Law from chennai, Tamil Nadu
1) A contribution should be cheque only . Don't accept any cash contribution
2) form the company first then company can purchase land from C by registered sale deed executed by C in favour of company
3) C should not transfer land to B if company is purchasing the said land from C
each director bringing money or land into the company as his capital contribution itself would be sufficient for the company to own the land during its existence, on dissolution it will revert back to C.
If after formation of the company without mentioning the land belonging to C (which is required for the construction of the company itself) all the 4 directors can pay money from the company in favour of C the individual and purchase the land from him, this way the company comprising of its 4 directors become the absolute owners of the said land purchased from C
Buying a land for the company is different to that of the share holding in the company by its directors or share holders.
The is no legal infirmity in the company buying the land from one its share holder and we in turn invests the said sale consideration into the company as his share of investment.
1. The company is at liberty to purchase the land from C. The consideration paid by company to C would be debited as land cost for project if the company is in construction business, else it will be treated as an asset.
2. in case the land is a long term capital asset C will be eligible for exemption u/s 54 if other conditions like completion of construction within 3 years is satisfied