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Share application money

prakash (Company Secretary) (1352 Points)

27 July 2015

Dear Professional Coleagues,

One of our client company bought land from X in year 2010 , instead of paying money, decided to allot Companys' shares to land owner, however company hasn't made allotment and showing as share application money in balance sheet. in this regard i have following queries;

1. is showing of amount as share application money in balance sheet right process?

2. Company decided to allot shares in its meeting held on 05.04.2015 to owners, what is process it has to follow.

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 27 July 2015

If the consideration has not been received in cash, how it was shown as share application money is not clear. Allotment should have been made at that time itself. Why it was kept pending for 5 years is also not clear.

In case of shares to be issued pursuant to scheme of arrangment for merger/demerger, the same is shown by companies as "Share Suspense Account" if the allotment was pending as on 31st March. Same method could have been followed in this case also.