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Issue of shares after incorporation

17 May 2014

I have one query. In Private limited company, suppose subscribers have not bring share application money after incorporation and more than 10 to 11 months have been passed on. Now subscriber brings their money after 11 months of incorporation, will it be valid ? And can we issue share certificate in this case even after a year of complition of financial year ? One more thing, can we issue to subscriber to MOA after complition of financial year if they brings money after financial year only. In that case the balance sheet will show capital less than 5.00 lacs. is this possible ? Kindly explain and reply.

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2 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 17 May 2014

As per Section 56(4)(a) of Companies Act 2013, share certificates have to be issued within two months of incorporation. Further, as per Sec.11(1), company cannot commence business unless a declaration is filed with ROC in Form INC.21 about payment of subscripttion amount. If this declaration is not filed within 180 days, company's name can be removed from the Register of Companies. In any case, system will not accept filing of Balance Sheet if the paid up capital is less than the prescribed amount at the end of the financial year.

CA Dhanesh Jangid (CA) (105 Points)
Replied 17 May 2014

Co was incorporated in June 2013 that time theae sections were not implemented at all. Can you pl explain the implications of these sections on my company. Practically co has yet not issued shares to the subscribers however co had received the share amount in the month of Aug.2013. what will be consequences. And is there any requirement of filling forms with MCA for allotment of shares or otherwise in my case.