Application Money

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Pooja Rohra (Querist)

23 July 2010 Whether a private company accept application money even if results amounts to more than authorised capital.

Ankur Garg

Ankur Garg (Expert)

23 July 2010 Hi,

As per my opinion receipt of share application money over and above of Authorised capital is not a default at all and very much possible. 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.

Making application to the company for allotment is just an offer pending acceptance from the company. Without acceptance the same would not be a binding contract for the company. Refer Indian Contract Act, 1872. Company reserves the right to reject the application and refund the share application money with or without interest as per the terms of acceptance of share application money.

Wait for other suitable opinions.

Best Regards

Pooja Rohra

Pooja Rohra (Querist)

23 July 2010 Thanks sir for resolving my query

DR GAURAV GUPTA FCA, FCS, LL.B

DR GAURAV GUPTA FCA, FCS, LL.B (Expert)

23 July 2010 BUT IF AUTHORISED AND PAID UP IS EQUAL THEN FIRST RAISE AUTHORISED OTHERWISE APPLICATION MONEY WILL BE COSIDERED AS PUBLIC DEPOSIT BECAUSE IT WILL BE A FABRICATED APPLICATION MONEY

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