Initial issue of shaes in a company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Could the subscribers of a Pvt. Ltd. Co. purchase shares subscribed by them in the MOA after the company has opened its current account with bank and make payments through cheques? However some part of the subscribed capital (approx. 25%) is purchased in cash.
The company has been incorporated in March 2012, but the subscribers are making payment upto Dec. 2012.Is it permissible under Companies act 1956?
Please help out with some provisions of the Companies Act.

Ajay Mishra

Ajay Mishra (Expert)
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03 September 2013 Hi

Yes, it is permissible.

In accordance with the provisions of section 36(2) of the Companies Act, 1956, all money payable by any member to the company under the MOA or AOA shall be debt due from him to the company. Further, a subscriber to the memorandum must pay for his shares in cash even if the promoters have promised him the shares for services rendered in connection with the promotion of the company.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Ya sir, I know that, but here the problem is different. The subscribers should pay in "CASH" but in this case, they are paying in cheques and after the opening of current account of the company, which has taken a time gap of few months.

Ajay Mishra

Ajay Mishra (Expert)
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03 September 2013 Yes, they can pay in any form. For subscriber it is liberty.

A subscriber to memorandum cannot, after issue of certificate of registration, repudiate his subscription on ground that he was induced to sign by misrepresentation of an agent of company. [Metal Constituents Ltd., In re (1902) 1 Ch. 707].

If subscribers to memorandum have any objection to memorandum and articles of association, the time to object is before putting their signatures to it. [East Bengal Sugar Mills Ltd., In re (1941) 11 Comp Cas 169 (Cal)].

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