Receiving of Application Money

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bhola muraw (Querist)

30 March 2010 Can any Company receive Share application money in cash?
Provide details with section refrence?
Its urgent please...

Ankur Garg

Ankur Garg (Expert)

30 March 2010 Hello,

In case your company has accepted the Share Application Money you may 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. No need to take any kind of approval from any concerned authorities.

Further collect the share application form from the proposed allottee for your record. You may download the sample share application from the link mentioned below:
https://www.caclubindia.com/share_files/files_display.asp?files_id=11908

On the practical front this money is very much available to the company as nobody can trace this money. Reason being there is no such requirement to open some escrow account for the same application money.

Practically use of this money depends on the terms of subscription agreement between the prospective investor and Issuer Company.

Regarding time limit to convert such share application money into capital the law is silent. However as per practice (specifically mention/mandatory requirement in FEMA regarding foreign money) allot share with 6 months of the receipt of application money.

Further there is no need to maintain share application money in a separate account.

Best Regards

bhola muraw

bhola muraw (Querist)

30 March 2010 Thanks Sir

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