Share Capital

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Nagendra Kumar (Querist)
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16 May 2008 Sir
In one of the companies which we have audited we have face a one problem.when we added the shere application money and paid up capital the sum of both exceeds the Authorized capital.Sir please explian me is it happens in any other companies? is there any statutory compailance for that? if it is possible please give me a supported case law.

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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16 May 2008 in my opinion, there is no problem at present, but you can't allot shares to applicants beyond authorised share capital. so, you will need to increase the authorised capital.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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16 May 2008 Yes what Mr.Yayati has stated is correct

R.V.RAO

R.V.RAO (Expert)
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17 May 2008 THE DIFFERENCE BETWEEN PAID UP CAPITAL AND SHARE APPLICATION MONEY IS THAT SHARE APPL. MONEY CAN BE REPAID BY A COMPANY WITHOUT ANY STATUTORY COMPLIANCES, WHILE PAID UP CAPITAL CANNOT BE REDUCED WITHOUT COURT APPROVAL.
WHEN WE ARE NOT SURE AS TO WHEN SHARE APLL. MONEY WILL BE BE PAID BACK(OR AT WHAT POINT OF TIME WE WILL ALLOT SHARES AGAINST THE SAME),HOW CAN WE CONSIDER IT AS PART OF PAID UP?
I FEEL ,IT IS NOT A LOGICAL STEP TO ADD TOGETHER TWO NUMERICALS ,WHEN ONE OF WHICH(SHARE APPL. MONEY) IS NOT SURE TO BE CONVERTED INTO PAID UP SHARE CAPITAL.
THERE IS NOTHING TO WORRY AS LONG AS THE PAID UP DOES NOT EXCEED THE AUTH. SHARE CAPITAL.
AS AND WHEN YOU NEED TO ALLOT NEW SHARES (WHICH INCREASES THE PAID UP CAPITAL,PL. ENSURE THAT THE FRESH INCREASE IN PAID UP PLUS THE PRESENT PAID UP TOGETHER DOES NOT EXCEED THE TOTAL AUTH .SHARE CAPITAL.
R.V.RAO

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