issue of shares in pvt ltd company

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vaishali (Querist)
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17 August 2009 pl tell me the time span within which a pvt ltd. company should issue shares from the date of receipt of share application money

and what is time span a public company which is not listed should issue shares from the date of receipt of share application money

thanks

Ankur Garg

Ankur Garg (Expert)
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17 August 2009 Hi Vaishali,

Subscribers of MOA are deemed shareholders of the company. They don't need to take shares. As soon as they subscribe the MOA & file it with ROC along with other incorporation documents they become the members as well as shareholders of the company. Appreciate further have you ever filed form-2 for the subscribers? The answer would be No. That itself is a kind of proof that no allotment is required to be made to the subscribers.

Form-2 is not required to be filed for subscribers hence no formal allotment is required in case of subscribers. They are deemed members and shareholders of the Company.

Regarding receipt of payment from subscribers I would say ideally such amount should be deposited by the subscribers after incorporation of the co. in the newly opened bank a/c of the company and record the same in the first BM Minutes. (as told you earlier).
Alternatively, as there is no tracing (as far as ROC is concerned) of such amount, it may be deposited by them later. As a CS i would suggested you should opt I option to avoid any kind of future problem.

DATE OF ALLOTMENT TO SUBSCRIBERS AND DATE TO BE MENTIONED ON SHARE CERTIFICATE

Date of allotment to subscribers will be the date of incorporation of the company and the same date will also be used for printing on share certificate to be issued to subscribers.
Practically & legally this is very much possible. To conclude you may use Date of Incorporation of the company for the purpose of:
1. Printing on share certificate of subscribers
2. as date of Allotment to subscribers
3. For the purpose of filling the column in register of member to enter the name of subscribers.

Even if you receive the amount from subscribers after 6 months the date of deemed Allotment and date on share certificate would remain the same i.e. date of incorporation of the company.

In case of any doubt please post it. I’ll definitely try my best to solve it.

Best Regards

Ankur Garg

Ankur Garg (Expert)
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17 August 2009 When the Company has accepted the Share Application Money you should do one simple thing. You may record the above transaction i.e. receipt of share application money and assurance given to proposed allottee in the board meeting minutes.

In other words simple noting of such receipt in the board minutes would be enough.

Regarding time limit to convert such share application money into capital the law is silent. However as per practice allot share with 6 months of the receipt of application money.

Best Regards

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