Initial paid up capital

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Mayank Maheshwari (Querist)

27 August 2016 i formed a private company last year, whose paid up subscribed capital of Rs 100000 is not yet deposited in bank yet. am i required to deposit it or i can show it in cash? are there any penalty/ fee for not depositing it.

ACA Anurag

ACA Anurag (Expert)

27 August 2016 The requirement of Rs. 1 lakh is with respect to the authorised share capital of the company. Authorised share capital essentially represents the aggregate value of shares which can be issued by a company. In contrast, issued and subscribed share capital represents the aggregate value of shares which have been issued by the company. The issued subscribed share capital has to be within the limits of the authorised share capital. In India, under the Companies Act at the time of incorporation of a company the requirement of Rs. 1 lakh is with respect to the minimum authorised share capital as well as the issued and subscribed share capital. So in essence, one can form a company today with Rs. 1 lakh in authorised as well as issued, subscribed share capital, with that entire amount allotted to shareholders. But such amount need not be invested in cash upfront. Principally, as per the accounting rules and standards prevalent in India, at the end of one (1) year, when the company draws up its accounts, the authorised capital is represented as Rs. 1 lakh on the liability side. To counter that, on the asset side, the company needs to show assets worth Rs. 1 lakh, which could be computer, machinery, intellectual property (like a trademark, valued by a valuer) or cash / bank account. Typically, one (1) year old companies have much more than Rs. 1 lakh in accumulated cash / reserves Hope you query is resolved Kindly like if my response has helped you

ACA Anurag

ACA Anurag (Expert)

27 August 2016 Hope your query is resolved

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