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Discussion > Corporate Law > Pvt ltd >

Issue of Shares to Subscribers to Memorandum of Association

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self employed


[ Scorecard : 40]
Posted On 25 May 2010 at 16:35 Report Abuse

Dear Members,

We have formed a private limited company last year i.e. on 15 October, 2009, but have not issued any shares to the subscribers to Memorandum and Articles of Association. Further, the consideration amount is still outstanding from the subscribers.

In the said situation, how can we proceed to issue share certificates to them and how stamp duty is to be calculated and paid considering the fact that now stamp duty is paid through franking which bears the current date and time.

Kindly suggest.

Regards,

Haresh Achantani


Online classes for CA CS CMA



MOHIT SALUJA
PRACTICING CS Jalandhar 9914558709


[ Scorecard : 1329]
Posted On 25 May 2010 at 16:59

there is not a big problem sir. as you can allot the shares to the subscribers by taking the application money and issue them the cerificates on the current date. and the stamp duty which will bear over the share certificate will be as per stamp act, as it is .25 per Rs. 100 in state of Punjab and 0.75 per Rs. 100 in Delhi.





Haresh
self employed


[ Scorecard : 40]
Posted On 25 May 2010 at 17:14

You mean to say there is no limitation as to time within which we have to issue shares to the subscribers. Are you sure?

And I doubt there is any requirement for subscribers to apply for shares, since they already have agreed to subscribe through Memorandum, which in itself is a binding agreement and as such there is no need to make application for shares by subscribers.




MOHIT SALUJA
PRACTICING CS Jalandhar 9914558709


[ Scorecard : 1329]
Posted On 25 May 2010 at 17:18

ya there may be many reasons like the chairman or managing director may not be present because of which the shares were not issued. so in such case, the shares will be alloted after after he comes to the country. so there is no limitation i think so, others views awaited.




Ankur Garg
Company Secretary and Compliance Officer


[ Scorecard : 103538]
Posted On 25 May 2010 at 17:27

Hi,

 

Subscribers of MOA are deemed shareholders of the company. They don't need to take shares. As soon as they subscribe the MOA & file it with ROC along with other incorporation documents they become the members as well as shareholders of the company.  Appreciate further have you ever filed form-2 for the subscribers? The answer would be No. That itself is a kind of proof that no allotment is required to be made to the subscribers.

 

Form-2 is not required to be filed for subscribers hence no formal allotment is required in case of subscribers. They are deemed members and shareholders of the Company.

 

Regarding receipt of payment from subscribers I would say ideally such amount should be deposited by the subscribers after incorporation of the co. in the newly opened bank a/c of the company and record the same in the first BM Minutes.

 

Alternatively, as there is no tracing (as far as ROC is concerned) of such amount, it may be deposited by them later. As a CS i would suggested you should opt I option to avoid any kind of future problem.

 

DATE OF ALLOTMENT TO SUBSCRIBERS AND DATE TO BE MENTIONED ON SHARE CERTIFICATE

 

Date of allotment to subscribers will be the date of incorporation of the company and the same date will also be used for printing on share certificate to be issued to subscribers.

 

Practically & legally this is very much possible. To conclude you may use Date of Incorporation of the company for the purpose of:

 

1.      Printing on share certificate of subscribers

2.      as date of Allotment to subscribers

3.      For the purpose of filling the column in register of member to enter the name of subscribers.

 

Even if you receive the amount from subscribers after 6 months the date of deemed Allotment and date on share certificate would remain the same i.e. date of incorporation of the company.

 

This is my personal opinion. Wait for other expert opinions.

 

Best Regards



Total thanks : 1 times



Haresh
self employed


[ Scorecard : 40]
Posted On 26 May 2010 at 12:53

So, Can I go ahead and issue share certificates to the subscribers by franking physical share certificates today?

Please do reply....

Thanks and Regards

Haresh Achantani




Rasesh
CS CWA MBA (Fin) B.Com LL.B (Spl)


[ Scorecard : 6441]
Posted On 26 May 2010 at 23:10

My views differ from that of Mr. Ankur. Allotment of shares takes place only after the subscripttion money is paid to the Company. Till then, the amount remains unpaid. It is only after the amount is paid by the subscribers, the allotment is to be recorded in the Board Meeting and the share certificates be issued.

 

Agree with the fact that Form 2 is not to be filed.




Haresh
self employed


[ Scorecard : 40]
Posted On 27 May 2010 at 10:22

Dear Ankur Sir,

 

But the moot question still remains as to whether I can pay stamp duty today on shares, which were issued to the subscribers to Memorandum and Articles of Association on incorporation date, considering the fact that stamp duty needs to be paid before execution date.

 

Please do clarify. I am awaiting your reply on the matter.

 

Regards,

Haresh Achantani




Rasesh
CS CWA MBA (Fin) B.Com LL.B (Spl)


[ Scorecard : 6441]
Posted On 27 May 2010 at 10:25

You may pay consolidated stamp duty on a specimen share certificate and mention this fact on the share certificates that are issued to the subscribers (whenever they are issued)




Haresh
self employed


[ Scorecard : 40]
Posted On 27 May 2010 at 12:18

You mean to say a company incorporated on 15th October 2009, can issue share certificates today to the subscribers i.e. after a time gap of 7 months. Please let know:

 

1.       Is there no time limit within which a company should issue share certificates to the subscribers?

2.       As said by Ankurji, the Share Certificate can be issued by mentioning incorporation date on the physical share certificate, even if the subscribers have not brought in the subscripttion amount. So, my doubt is:

 

a.       If I issue share certificates today with the current date, how will I satisfy payment of stamp duty, which is being paid today, while the certificates bears the date of incorporation on it i.e. 15.10.2009. In short, certificates are issued before payment of stamp duty, which is not possible.

b.      And in the absence of subscripttion amount from subscribers, what should be mentioned on the face of the share certificate as to the amount being paid-up on the shares.

 

Any case law or comprehensive writing on the above matter will be highly appreciated, if possible.

 

Thanks and Regards,

Haresh Achantani



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