Share allotment - timeline
This query is : Resolved
23 August 2011
Under what period of time shares needs to be allotted after receiving full call money from shareholder?
Please refer to relevant provisions also.
Please refer to relevant provisions also.
23 August 2011
As is evident that the 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.
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.
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.
23 August 2011
Thanx.
But Im looking for a specific provisions which provides that shares should be issued within some timelimit.
But Im looking for a specific provisions which provides that shares should be issued within some timelimit.
23 August 2011
There is no specific provision as such in the companies act for such allotment.
07 November 2012
Is there any time limit now under the recently amended Companies Act,2011 for allotment of share against Share Application Money?
25 July 2025
Here’s a detailed explanation regarding the **timeline for share allotment after receiving share application money**, along with the relevant provisions from the Companies Act:
---
### 1. **Is there any specific timeline prescribed in the Companies Act for allotment of shares after receiving application money?**
* **No explicit timeline** is prescribed under the Companies Act, 2013 (or the earlier Companies Act, 1956) that mandates allotment must be made within a fixed number of days after receipt of application money.
* The Act does **not specify a strict deadline** for allotment once share application money is received.
---
### 2. **What do the regulations or practice suggest?**
* Though no statutory time limit is prescribed, **it is common practice to allot shares within 6 months** of receipt of application money to avoid complications.
* Delays beyond a reasonable time may lead to legal uncertainty or refund obligations.
* **The Board of Directors** must pass a resolution for share allotment, and the company must file necessary returns (e.g., **SH-7** for allotment with Registrar of Companies) within prescribed time limits.
---
### 3. **Relevant provisions and procedures:**
* **Section 39 (Application money on shares)**: Application money must be received before allotment.
* **Section 42 (Private placement) and Section 62 (Further issue of shares)**: prescribe procedural compliances but not timelines for allotment.
* **Section 56 (Issue of shares and transfer of shares)**: Share certificate to be issued **within 2 months** from the date of allotment.
* **Rule 13 of Companies (Share Capital and Debentures) Rules, 2014**: requires filing **Return of Allotment (Form SH-7)** with ROC **within 30 days** from the date of allotment.
---
### 4. **Practical implications:**
* The company should ideally allot shares **soon after receiving application money**, to maintain transparency and legal certainty.
* The allotment process involves:
* Passing Board resolution
* Issuing allotment letters/share certificates
* Filing **Form SH-7** within 30 days
* Failure to allot or refund application money may attract **penalties** or legal challenges.
---
### 5. **Summary:**
| Aspect | Provision/Practice |
| ----------------------------- | -------------------------------------------------------- |
| Timeline for allotment | No specific statutory timeline; practice within 6 months |
| Filing allotment with ROC | Form SH-7 within 30 days from allotment |
| Issuance of share certificate | Within 2 months from allotment (Section 46) |
---
If you want, I can share a sample Board Resolution for allotment or guide you on filing Form SH-7.
Would that help?
---
### 1. **Is there any specific timeline prescribed in the Companies Act for allotment of shares after receiving application money?**
* **No explicit timeline** is prescribed under the Companies Act, 2013 (or the earlier Companies Act, 1956) that mandates allotment must be made within a fixed number of days after receipt of application money.
* The Act does **not specify a strict deadline** for allotment once share application money is received.
---
### 2. **What do the regulations or practice suggest?**
* Though no statutory time limit is prescribed, **it is common practice to allot shares within 6 months** of receipt of application money to avoid complications.
* Delays beyond a reasonable time may lead to legal uncertainty or refund obligations.
* **The Board of Directors** must pass a resolution for share allotment, and the company must file necessary returns (e.g., **SH-7** for allotment with Registrar of Companies) within prescribed time limits.
---
### 3. **Relevant provisions and procedures:**
* **Section 39 (Application money on shares)**: Application money must be received before allotment.
* **Section 42 (Private placement) and Section 62 (Further issue of shares)**: prescribe procedural compliances but not timelines for allotment.
* **Section 56 (Issue of shares and transfer of shares)**: Share certificate to be issued **within 2 months** from the date of allotment.
* **Rule 13 of Companies (Share Capital and Debentures) Rules, 2014**: requires filing **Return of Allotment (Form SH-7)** with ROC **within 30 days** from the date of allotment.
---
### 4. **Practical implications:**
* The company should ideally allot shares **soon after receiving application money**, to maintain transparency and legal certainty.
* The allotment process involves:
* Passing Board resolution
* Issuing allotment letters/share certificates
* Filing **Form SH-7** within 30 days
* Failure to allot or refund application money may attract **penalties** or legal challenges.
---
### 5. **Summary:**
| Aspect | Provision/Practice |
| ----------------------------- | -------------------------------------------------------- |
| Timeline for allotment | No specific statutory timeline; practice within 6 months |
| Filing allotment with ROC | Form SH-7 within 30 days from allotment |
| Issuance of share certificate | Within 2 months from allotment (Section 46) |
---
If you want, I can share a sample Board Resolution for allotment or guide you on filing Form SH-7.
Would that help?
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