Is it necessary to invest in cash?
Cash Is Not the Only Option
- Under Section 78(3)(b) of the Companies Act 2016
- Shares may be issued for consideration
- In other words
- An investment does not have to be made in cash
What Is "Consideration"?
- Consideration refers to assets, rights, or value provided in exchange for shares
- It must be equivalent to the value of the shares being issued
What Can Be Used as Consideration?
- Cash
- Tangible Assets
- Services
- Agreements or Contracts
- Valuable Promises made to the company
Can Patents Be Used as an Investment?
- Yes
- Under the Patents Act 1983
- A patent is recognised as an Intangible Asset
- It may be:
- Transferred
- Licensed
- Charged as security
- Therefore, a patent may legally be used as consideration
- In exchange for company shares
Summary
- Company investments do not have to be made in cash
- Under Section 78(3)(b) of the Companies Act 2016
- Any lawful consideration equivalent to the value of the shares may be accepted
- This includes cash, assets, services, patents, and other forms of valuable consideration