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Hello
In private company as shares can be issued against non cash consideration, as far as non cash consideration is reasonable I.e shares can only be issued at overvaluation or it can even be issued at undervaluation?
A private company wishes to issue shares in respect of non-cash consideration to be received
Say $100 worth of shares
It could receive $120 worth of (say) furniture for those shares …
… or it could receive $80 worth of furniture
But that $80 worth of furniture would need to be recorded as the receipt of $100 PPE because otherwise it would represent the issue of shares at a discount and that, of course, is a no-no
In a plc situation there has to be independent professional accountant confirmation that the value of the non-cash consideration (+ any cash involved) shall not be less than the nominal value of the shares issued together with any attributable share premium
OK?
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