share application money

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 March 2010 Is there any time limit withing which the shares are to be allotted in respect of share application money received ?

Whether share application money can be utilised for carrying on the business ( without allotting shares ) ?

Thanks in advance

Ankur Garg

Ankur Garg (Expert)
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13 March 2010 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.

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.

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.

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

Use of share application money depends upon the agreement between the issuer company and prospective shareholder.

Regards