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Share application money

Rahul (owner) (91 Points)

20 May 2014

If share application money pending allotment is there as on 01/04/2014 and no allotment has been made till now. my questions are:

1. do we have to refund the money after ending 60 days i.e. 31/05/2014

2. will it be treated as deposit u/s 73 and have we to file deposit return on or before 30/0/2014

3. can this share application money be refunded now and forget everything

4. can it be shown as repaid in cash (adjustment) induring f y 2013-14

5. what will happen if no spare auth. capital with company to allot the shares

reply as soon as possible urgent

Thanks in advance

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8 Replies

praveen (Chartered Accountant) (6971 Points)
Replied 20 May 2014

In case you have share application money outstanding as on 01.04.2014 you will get 1 year time to either allot it or to repay it back to the respective parties. However within 3 months you need to file a form with the ROC.

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Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 21 May 2014

Hi Rahul

Section 42 states that share application money is to be allotted within 60 days of receipt or refunded within 15 days thereafter....or else interest to be paid thereafter...

The deposits rules states that any share application money not refunded as per above will be treated as deposits and compliances are to be accordingly done...

So to avoid above complications and since authorised capital is also not increased, it is better if you refund the share application money for which you have ample time to do so....

Regards

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Rahul (owner) (91 Points)
Replied 21 May 2014

Thanks praveen and vandana

but what happen if we return this money within 60 days i.e. before 31/05/2014

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 21 May 2014

I dont think it will create any problem....it is the company's discretion whether to allot or not....

Rahul (owner) (91 Points)
Replied 21 May 2014

no my question is if we return the money with in 60 days that do we need to file DPT -4

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 22 May 2014

No, it will be treated as deposits only if it has not been allotted or refunded within the time period mentioned....so since you are refunding it within the time limit it is not a deposit....

SUMIT AGRAWAL (PARTNER) (21 Points)
Replied 28 July 2015

Dear all,

Can a company issue shares without asking for share application money.

pass1478 (CA Practice ) (21 Points)
Replied 31 July 2015

Share application money is the amount received by a company from applicants who wish to purchase its shares. It is the money received in respect to an initial public offering of shares. This money can be more or less than the actual amount anticipated in respect to the number of shares floated. The recognition of share application money in a balance sheet should be carefully recorded; otherwise, it will lead to misstatement of the financial position of a company. These funds can be represented on a balance sheet in various states.

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