Share Application Money

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venkata ravikumar padmanabhuni (Querist)

25 September 2010 I have a question that "Are the directors in a pvt ltd co., get the share application money in the form of CASH ???

If yes, how much amt can they get in the form of cash as share application money??

Ajay Mishra

Ajay Mishra (Expert)

27 September 2010 Share Application money is the kind of money which are collected by the company for the allotment of shares in future. The is no specific criteria for how much you can collect share application money.

But the treatment of share application money is that you can allot shares from such shares application money only up to the authorized share capital of the company, and balance you can kept in same account until you increase the authorized share capital.

The share application money can be collected in cash from any one on behalf of the company and credited to company account.

Regards

Ankur Garg

Ankur Garg (Expert)

27 September 2010 It is not ADVISABLE TO ACCEPT SHARE APPLICATION MONEY IN CASH.

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

Regards