When the company allots shares against assets purchased, businesses acquired, services received or as fully paid-up to promoters.
What does “other than cash” mean?
Shares are sometimes allotted without receiving cash. Instead, the consideration is an asset (machinery, building), an entire business (in case of acquisition), or services rendered (e.g., to promoters, underwriters, technical experts). Such issues are perfectly legal under the Companies Act, 2013, but the allotment must be supported by a valuation report.
Common situations
- Purchase of assets — paying the vendor of machinery/land in shares.
- Acquisition / takeover — buying a running business and paying the purchase consideration in shares.
- Promoters / underwriters — issuing fully paid-up shares for their services.
- Conversion — debentures or loans converted into shares.
Swathika B is an MBA graduate in Finance & Business Analytics , the founder of The Commerce Lab. With a strong academic foundation in B.Com BFSI and hands-on experience in financial analysis, data analytics, and business studies, she created this platform to make Commerce and Accountancy simple, practical, and exam-ready for students across India.