Loan to Equity Conversion in Amritsar
Turn an existing loan — from a director, shareholder, investor or bank — into equity shares under the Companies Act, 2013. Our CA/CS team handles the special resolution, board approval, share allotment against the loan and the PAS-3 filing end to end, with no fresh cash inflow required.
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Loan to Equity Conversion in Amritsar
RoC Chandigarh — Kendriya Sadan, Sector 9-A, Chandigarh – 160019
Punjab & Haryana High Court
03 (Punjab)
Punjab does not levy Professional Tax.
GT Road, Hall Bazaar, PSIEC Focal Point, Majitha Road, Chheharta
Amritsar is Punjab's holiest city (Golden Temple) and a major centre for textiles, food processing, and cross-border trade via the Attari-Wagah border. Tourism, handicrafts, and Phulkari embroidery drive the economy.
What Is Loan to Equity Conversion?
A quick, plain-language explanation before the details.
Conversion of loan into equity means a company issues shares to a lender in place of repaying an existing loan — the debt is settled by giving the lender ownership, so no cash actually changes hands.
Under Section 62(3) of the Companies Act, 2013, where the terms of a loan approved by special resolution provided an option to convert the loan into shares, that option can be exercised. Where no such prior option exists, shares are allotted afresh under Section 62(1)(c) at a price supported by a registered valuer’s report.
The allotment is filed with the Ministry of Corporate Affairs (MCA) / Registrar of Companies through Form PAS-3, and the special resolution through Form MGT-14, on the MCA21 V3 portal.
Once shares are allotted and PAS-3 is registered, the loan stands extinguished and the lender becomes a shareholder — a permanent change to the capital structure recorded in the company’s register of members.
Quick Facts
Is This Service Right for You?
Ideal for
- Startups converting a founder or director loan into equity
- Companies where an investor’s loan is being turned into shares
- Businesses cleaning up the balance sheet by reducing debt
- Companies whose loan agreement already carried a conversion option
- Borrowers whose bank loan is being converted under a restructuring
- Groups converting inter-corporate loans into equity holdings
You may need this if
- You have an outstanding loan you want to treat as share capital
- Your loan agreement gave the lender an option to convert into shares
- You want to reduce debt without a fresh cash payout
- An investor wants their loan converted into an equity stake
- A lender or bank has asked for conversion under a restructuring
- You need the allotment and PAS-3 filing done correctly
Not sure if you need this?
Talk to an Expert →Why Convert a Loan into Equity?
Converting debt into shares reshapes a company’s balance sheet and its ownership. Here is why companies do it.
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01
Reduce Debt Burden
Converting a loan into equity removes a liability from the balance sheet and eases repayment and interest pressure on the company.
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02
No Fresh Cash Needed
The loan itself becomes the consideration for the shares — the debt is settled without any new cash outflow from the company.
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03
Align Lender & Company
A lender who becomes a shareholder shares in the upside, aligning their interest with the long-term growth of the business.
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04
Improve Borrowing Capacity
A stronger equity base and a lower debt-to-equity ratio can make future borrowing and fundraising easier.
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05
Formalise Investor Stakes
An investor who first came in through a loan can be converted into a formal equity shareholder with a clean, recorded holding.
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06
Stay Compliant
Done under Section 62, the conversion is a valid, documented allotment — protecting the company from disputes over the shares issued.
Simple, Transparent Pricing
Custom quote for your case
Fees depend on your business type and scope. Get a clear, itemised quote upfront — no hidden professional charges, government fee billed at actuals.
Who Can Apply?
Eligibility checklist
- An existing, genuine loan recorded in the company’s books
- Either a special resolution passed under Section 62(3) when the loan was raised, or a fresh Section 62(1)(c) route
- Sufficient authorised share capital to allot the new shares (increase first if not)
- A registered valuer’s report where shares are issued under Section 62(1)(c)
- Board approval and, where required, member approval by special resolution
- The lender’s consent to receive shares in place of repayment
Everything You Need. One Professional Team.
Consultation
Review the loan, its terms and whether a prior conversion option exists.
Route Selection
Advise whether Section 62(3) or a fresh Section 62(1)(c) allotment applies.
Valuation Coordination
Arrange a registered valuer’s report where the 62(1)(c) route is used.
Resolution Drafting
Draft the board resolution and the special resolution with explanatory statement.
Member Approval
Prepare the notice and support the general meeting for the special resolution.
Share Allotment
Allot shares against the outstanding loan and update the register of members.
MCA Filing
File Form PAS-3 for the allotment and Form MGT-14 for the special resolution.
Records & Certificates
Issue share certificates and hand over updated statutory registers.
What You’ll Receive
What Documents Are Required to Convert a Loan into Equity?
Requirements are grouped by the loan records, the approvals/valuation and the signatory details for MCA filing. Keep clear scans (PDF/JPG) ready — everything is collected securely online.
Loan & Company Records
Proof of the existing loan- Loan agreement / sanction letter with terms
- Ledger / board records showing the outstanding loan
- Bank statements evidencing receipt of the loan
- Certificate of Incorporation, MOA & AOA
Approvals & Valuation
Resolutions & valuer report- Existing special resolution authorising conversion (Section 62(3) route)
- Registered valuer’s report (Section 62(1)(c) route)
- Board & members’ approval for the allotment
- Lender consent to receive shares in lieu of repayment
Signatory & Digital
For MCA filing- PAN & address proof of directors / signatory
- Digital Signature Certificate (DSC) of the authorised director
- Details of the lender / allottee (PAN, address, folio)
- Latest audited financials, where required for valuation
The route decides the documents
If the loan was raised with a conversion option approved by special resolution, the Section 62(3) route applies and no fresh valuation is needed. Otherwise, shares are issued afresh under Section 62(1)(c), which requires a registered valuer’s report.
Prove the loan is genuine
Keep the loan agreement, board records and bank statements showing the money was actually received. A clear paper trail from receipt of the loan to its conversion is essential.
Check authorised capital first
You can only allot shares up to the authorised share capital. If it is insufficient, the authorised capital must be increased before the allotment.
DSC needed for filing
PAS-3 and MGT-14 are filed on MCA21 with the Class-3 Digital Signature Certificate of an authorised director. We arrange this if it is not already held.
Don’t have all the documents?
We’ll identify what your case needs →How to Convert a Loan into Equity (Step by Step)
The approvals and filings happen online through the MCA21 V3 portal.
Review the loan & pick the route
Examine the loan terms. If a conversion option was approved by special resolution when the loan was raised, use Section 62(3); otherwise use Section 62(1)(c).
Valuation (62(1)(c) route)
For a fresh allotment, obtain a registered valuer’s report to fix the price at which shares are issued against the loan.
Board approval
The board meets to approve the conversion, the price, and — where needed — to call a general meeting for the special resolution.
Special resolution (where required)
Members pass the special resolution and file Form MGT-14 with the ROC within the prescribed time.
Allot shares against the loan
The board allots shares to the lender in place of repayment, updates the register of members and issues share certificates.
File PAS-3
File the return of allotment in Form PAS-3 with the MCA — the loan is extinguished and the lender is recorded as a shareholder.
How Long Does Loan-to-Equity Conversion Take?
| Stage | Expected Time |
|---|---|
| Route review, valuation & drafting | 3–7 working days |
| Board / general meeting & special resolution | Notice period + meeting |
| Allotment + PAS-3 & MGT-14 filing | 2–5 working days |
A typical conversion completes in about 2–4 weeks, driven mainly by the notice period for the general meeting where a special resolution is required, and by MCA processing. The Section 62(3) route (option already approved) is usually faster than a fresh Section 62(1)(c) allotment, which adds a valuation step.
Key Dates — At a Glance
| Frequency | What Is Due |
|---|---|
| Immediately | Issue share certificates within the prescribed time · Update the register of members & allotment · Pay stamp duty on the share certificates |
| With the ROC | File Form PAS-3 (return of allotment) · File Form MGT-14 for the special resolution · Reflect the change in the next annual return (MGT-7) |
| Accounting | Remove the loan liability from the books · Record the increased share capital & premium · Disclose the conversion in the financial statements |
| Event-Based | FEMA / FC-GPR reporting if the lender is non-resident · Update shareholding pattern & cap table · Revise SBO / BEN records if control changes |
Dates are indicative and may change with government notifications. Our team tracks every deadline so you never miss a filing.
Doing It Yourself vs TaxClue
Doing It Yourself
- Decide between the Section 62(3) and 62(1)(c) routes yourself
- Confirm whether a valuation report is required
- Check that authorised capital is sufficient to allot
- Draft board and special resolutions correctly
- Run the general meeting and notice process
- File PAS-3 and MGT-14 without errors
- Risk a defective allotment or ROC query
With TaxClue
- Expert confirms the correct legal route
- Valuation coordinated where the 62(1)(c) route applies
- Authorised-capital check done before allotment
- Resolutions drafted with the right explanatory statement
- Meeting notices and minutes prepared for you
- PAS-3 and MGT-14 filed by our team
- A clean, defensible allotment on record
Skip the guesswork.
Let an expert handle it →Common Mistakes That Delay Your Application
TaxClue reviews your documents before filing to reduce avoidable errors.
What Applies After the Conversion?
Immediately
- Issue share certificates within the prescribed time
- Update the register of members & allotment
- Pay stamp duty on the share certificates
With the ROC
- File Form PAS-3 (return of allotment)
- File Form MGT-14 for the special resolution
- Reflect the change in the next annual return (MGT-7)
Accounting
- Remove the loan liability from the books
- Record the increased share capital & premium
- Disclose the conversion in the financial statements
Event-Based
- FEMA / FC-GPR reporting if the lender is non-resident
- Update shareholding pattern & cap table
- Revise SBO / BEN records if control changes
Penalties & Consequences
What is at stake if you do not comply
- Converting a loan to equity without the proper resolution is a Companies Act breach
- Skipping the registered valuer's report on the Section 62(1)(c) route
- Allotting beyond the available authorised share capital
- Missing the MGT-14 filing for the special resolution
- Ignoring FEMA rules where the lender is a non-resident
Regulatory Updates 2025–26
- 2025: Allotment of shares is reported in Form PAS-3 within 30 days on the MCA V3 portal.
Why Businesses Choose TaxClue
CA / CS Team
Qualified Chartered Accountants and Company Secretaries handle the resolutions and filings.
Right Legal Route
We confirm whether Section 62(3) or 62(1)(c) applies so the allotment is valid.
End-to-End
From loan review to PAS-3 filing — fully managed, minimal effort from you.
100% Online
Everything over WhatsApp / email — no office visits required.
Transparent Fees
A clear quote upfront — ₹0 hidden professional charges.
Post-Service Support
Guidance on registers, certificates and the next compliance steps.
Your Documents Deserve Professional Care
- Documents handled by professionals under confidentiality
- Access limited to the team working on your file
- Communication over secure digital channels
- Documents retained only as long as needed for compliance
Frequently Asked Questions
Can a company convert a loan into equity shares?
What is Section 62(3) of the Companies Act, 2013?
What if there was no conversion option when the loan was raised?
Is a valuation report required to convert a loan into equity?
Which forms are filed with the MCA for the conversion?
Does converting a loan into equity bring in fresh cash?
Whose loan can be converted into equity?
Do we need to increase authorised capital first?
How long does loan-to-equity conversion take?
What compliance follows after the shares are allotted?
Can a bank loan be converted into equity?
Is the first consultation free?
How do I convert a loan into equity shares in my company?
Can a director’s loan or unsecured loan be converted into equity?
Is board and shareholder approval required to convert a loan into shares?
How long does it take to convert a loan into equity?
What are the tax and stamp-duty implications of converting a loan to equity?
Official Sources & Legal References
Every regulatory reference on this page is drawn from primary law and official government sources. Verify them directly:
- Companies Act, 2013 — Section 62Further issue of share capital, including sub-sections 62(1)(c) and 62(3) · India Code
- MCA — Ministry of Corporate AffairsOfficial portal to file PAS-3, MGT-14 and track filings
- MCA — Company e-Forms (PAS-3, MGT-14)Return of allotment and resolution-filing forms with instructions
- Companies (Share Capital and Debentures) Rules, 2014Rules governing allotment, valuation and issue of shares
Related Guides
Loan to Equity Conversion Resources — All Free
Convert Your Loan into Equity — the Right Way
Expert-managed conversion under the Companies Act, 2013 — route advice, resolutions, valuation coordination, share allotment and PAS-3/MGT-14 filing, end to end. Free consultation, clear quote upfront, zero hidden charges.