Question

A company may issue shares for non cash consideration in the following situations:
1. Issue of shares for acquisition of assets
2. Issue of shares to vendors of business
3. Issue of shares to promotes, etc., for services rendered
Which is correct?

• A. $1$ and $2$
• B. $1$ and $3$
• C. $2$ and $3$
• D. All the three

Answer 1

The correct option is D All the three

In case a company does not have sufficient funds for the purchase of fixed assets or for payment to creditors it may offer and allot its shares to vendors/ creditors in lieu of cash. Any allotment of shares against which cash is not to be received is called ‘issue of shares for consideration other than cash’.