Promoter not paying shares application money

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CA Ashish Bohra (Querist)

20 April 2012 I have incorporate a private limited company. Now one of the share holder is in financial crisis and is unable to pay his share money.
Now how to remove him as a promoter and share holder as he has subscribed to MOA but unable to pay amount to company.
Pls help

Ajay Mishra

Ajay Mishra (Expert)

20 April 2012
Hi

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 memorandum or articles 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.

When a person signs a memorandum for any number of shares he becomes absolutely bound to take those shares and no delay will relieve him from that liability unless he fulfills the obligation.

Regards

CA Ashish Bohra

CA Ashish Bohra (Querist)

20 April 2012 The other share holders are agreed to take his share and pay the sum and can fresh shareholders are also willing to buy shares. Now my question is how to remove the old shareholder who actually not taken any share.

Ajay Mishra

Ajay Mishra (Expert)

20 April 2012 Hi

You can not removed the subscriber from MOA and register of members.

Regards

Ajay Mishra

Ajay Mishra (Expert)

20 April 2012 Hi...

Few case Laws:

1. A subscriber to memorandum of association is deemed to have agreed to become a shareholder, even if he submits no application and no allotment of shares is made to him. [Collector of Moradabad v Equity Insurance Co. Ltd. (1948) 18 Comp Cas 309 (Oudh)].

2.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].

3.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)].
4.A person subscribing to the Memorandum shall become a member of the company on its incorporation and remains so till the company accepts his surrender of shares or he transfers shares. [U.P. Oil Mills Co. Ltd., In re (1931) 1 Comp Cas 262 (All)].

Regards

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