Apllication mony collected by privet limited co.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 July 2013 Respected Sir,

1. Can a Privet Company use Application Money for Business Purpose?
If Yes, What is time limit?
If No, What are remedies and provisions?

2. Can a Privet or Public Company rise Application Money more than Authorized Capital?

Ajay Mishra

Ajay Mishra (Expert)
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01 July 2013
Hi

Generally, the provision of Companies Act, 1956 is silent about share application money received from resident. The time limit is not defined, so many company hold such application money as per their suitability.

For Public Companies:

As per Rule 8(4) of the Companies (Preferential Allotment) Rules, 2003 as amended on 14.12.2011:

(4) Any allotment of securities shall be completed within sixty days from the receipt of application money and in case the company is not able to allot the securities within the said period of sixty days, it shall repay the application money within 15 days thereafter, failing which it will be required to be re-paid with interest at the rate of 12% per annum.
Provided that the monies received on such application shall be kept in a separate bank account and shall not be utilize for any purpose other than:-
(i) for adjusting against allotment of securities; or
(ii) for the repayment of monies where the company is unable to allot securities.

(5) No company offering securities shall release any public advertisement or utilize any media, marketing or distribution channels or agents to inform the public at large about such an offer.

So, public company has some restriction on treatment of share application money.

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2013 But sir what if company is using money for the pourpose of business transections? and what if hold and no interest is paid by PVT co

Ajay Mishra

Ajay Mishra (Expert)
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05 July 2013 They can not use it before allotment.

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