LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Share application money

sreedevi (Trainee) (118 Points)

01 September 2009

have a question regarding share capital of a Company. The details are:

Authorised capital Rs.400 crore. Paid up share capital - Rs.350 crore.
Share advance - Rs.70 crore.

Can share advance amount together with paid up share capital exceed Authorised share capital?

Your expert comments are solicited on this

C. Sreedevi

Reply
Follow
Share

8 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 01 September 2009

Hi,

As per facts provided by you paid up capital is Rs. 350 crore and authorised capital is Rs. 400 crore and company has also received share application money of Rs. 70 crore.

As per my opinion receipt of share application money over and above of Authorised capital is not a default at all. Reason being share application money is not in the nature of paid up capital unless and until allotment of share against the share application money.

In other words only after allotment of share you can consider such share application money as paid up share capital. But before passing allotment resolution you have to increase your Authorised capital.

Best Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 01 September 2009

As is evident that the Company has accepted the Share Application Money you may do one simple thing. You may record the above transaction i.e. receipt of share application money and assurance given to proposed allottee in the board meeting minutes.

In other words simple noting of such receipt in the board minutes would be enough. No need to take any kind of approval from any concerned authorities.

Regarding time limit to convert such share application money into capital the law is silent. However as per practice allot share with 6 months of the receipt of application money.

Further collect the share application form from the proposed allottee for your record. You may download the sample share application from the link mentioned below:

/share_files/files_display.asp?files_id=11908

Regards