Share application money

This query is : Resolved

RItu (Querist)
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14 August 2008 For how long share application money can be kept under the same head in Balance sheet in a pulic company and what is the time limt for completing allotment of shares

Srinath A. N.

Srinath A. N. (Expert)
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14 August 2008 The Companies Act not specified time limit for allotment of shares from the date of receipt of application money. However, as per SEBI guidelines, the Company shall allot shares within 130 days from the date of receipt of application money and if fails company shall pay interest @ 6% p.a.

There are some judgement says unreasonable delay in allotment is irregular allotment.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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14 August 2008 Assuming that it is an unlisted public company, even then they have to allot shares before the money is utilsed for the company. Otherwise the applicant may bring in a civill suit for violation of contract and demand specific performance with damages. For, using of the applicant's money will be presumed as acceptance of application.

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