03 October 2013
A new company was incorporated on 18th March, 2013. Till 31st March, 2013 the subscribers had not brought any capital into the company. (1)What is the time limit to bring the capital by the subscribers? (2)Also, as per new guidelines, the preliminary expenses are not to be carried forward. So all the preliminary expenses are to be written off in 2012-13 and loss must be declared in Profit & Loss Account? Or to be carried forward? There are no other transactions during 2012-13. (3)If the capital is not brought by the subscribers till 31st March, 2013 in cash or kind, is this a fault on the part of the company/subscribers? (4)Also, how will be the balance sheet appear as on 31st March, 2013? Option 1: Assets: Preliminary Exp./Reserves & Surplus (Loss) Liabilities: Sundry Creditors (Amount same as preliminary exp.)
Option 2: Assets: Loan (Amt. same as Capital) Preliminary Exp./Reserves & Surplus (Loss) Liabilities: Capital Creditors (Amt. same as prel. exp.) (As once the subscribers subscribe to the capital, it becomes debt on their part.)
Or any other way the balance sheet to appear as on 31st March, 2013?
In accordance with the provisions of section 36(2) of the Companies Act, 1956, all money payable by any member to the company under the MOA or AOA shall be debt due from him to the company. Further, a subscriber to the memorandum must pay for his shares in cash even if the promoters have promised him the shares for services rendered in connection with the promotion of the company.
04 October 2013
Apropos share capital adjustment you are under obligation to show paid-up capital since subscriber to memorandum by subscribing to moa get into a contractual liability and same is considered as debt owed to company by subscriber (sec. 36(2). (deemed capital)
However, Companies Act, 1956 nowhere provides time limit for such contribution.
you may show capital in the balance sheet as subscribed and the unpaid amount may be shown as receivables or debt due from promoter/subscriber.
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