Mahender kukatla (Articled Assistant) (36 Points)
02 July 2016Let us assume a private limited company received share application money of INR 1.50 Crores on 01/07/2016.
For how many days the said money be kept under Share application money?
By what time it shall be allotted or refunded?
Is the position is same if it is a Public Ltd?
Shreesh Kumar
(CA Final)
(122 Points)
Replied 02 July 2016
Dear Mahender,
A private company first has to offer shares to its existing shareholders before allotting shares to outsiders. If company wants to allot share to outsiders, it has to comply with the provision of Private Placement of Companies Act 2013 (section 42).
Provisions of Section 42 are:
In case company is not able to allot shares within 60 days of receipt of application money, it shall be repaid that money with interest @ 12% p.a. within 15 days from the date of completion of 60 days.
As far you query is concerned answers are:
For how many days the said money be kept under Share application money?
Answer: 60 days + 15 Days i.e. up to 14th September 2016. After the expiry of this period it will considered as Deposit as per Companies (Acceptance of Deposit) Rules 2014.
By what time it shall be allotted or refunded?
Answer: Allotment shall be done within 60 days and if allotment has not been done said amount shall be refunded within 15 days from completion of 60 days.
Is the position is same if it is a Public Ltd?
Answer: Section 42 is for Public Limited. In case shares are issued to outsiders by a Private Ltd. Company this Section 42 becomes applicable for Pvt. Ltd. Company also.
Thanks and Regards
Shreesh Kumar
CAclubindia
