share caPITAL
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 March 2011
can share application money + subscribed share capital be more than authorised capital for a non-listed pvt ltd co.,. If the answer is 'no' why and what are the consequences.
Thank you
Thank you
24 March 2011
Yes. It can be.
The company cannot have control over the number of applications or the quantum of application money being received but at the earliest they must decide about the allotment ratio and refund the excess amount to the applicants. They cannot retain the excess money for an unreasonable period.
Other expert comments on the subject will be appreciated.
The company cannot have control over the number of applications or the quantum of application money being received but at the earliest they must decide about the allotment ratio and refund the excess amount to the applicants. They cannot retain the excess money for an unreasonable period.
Other expert comments on the subject will be appreciated.
25 July 2025
No, share application money + subscribed share capital cannot exceed the authorised share capital of a private limited company, whether listed or unlisted.
📌 Why?
As per Section 2(8) of the Companies Act, 2013, Authorised Capital (also known as nominal capital) is the maximum capital that a company is legally allowed to issue to shareholders. This is mentioned in the company’s Memorandum of Association (MoA).
Subscribed share capital is the portion of issued capital that has been agreed to be taken up by shareholders.
Share application money is the amount received from prospective shareholders awaiting allotment.
Thus, the sum of shares already issued/allotted (subscribed) and proposed to be issued (application money received) must not exceed the authorised capital.
⚠️ Consequences of Violation:
If share capital (issued + application pending) exceeds authorised capital:
Registrar of Companies (ROC) may not accept forms related to share allotment (like PAS-3).
Allotment of shares beyond authorised capital is invalid unless authorised capital is first increased by passing:
A Board Resolution,
A Shareholders’ Resolution (Ordinary), and
Filing Form SH-7 with ROC along with revised MoA.
Penalties under Section 450 of the Companies Act, 2013:
Company and officers may each be fined ₹10,000, and ₹1,000/day for continuing default.
✅ What You Should Do:
If you already have share application money that will exceed the authorised capital:
Increase the authorised share capital first by:
Amending the MoA.
Filing Form SH-7 with ROC.
Then proceed with allotment and filing Form PAS-3
📌 Why?
As per Section 2(8) of the Companies Act, 2013, Authorised Capital (also known as nominal capital) is the maximum capital that a company is legally allowed to issue to shareholders. This is mentioned in the company’s Memorandum of Association (MoA).
Subscribed share capital is the portion of issued capital that has been agreed to be taken up by shareholders.
Share application money is the amount received from prospective shareholders awaiting allotment.
Thus, the sum of shares already issued/allotted (subscribed) and proposed to be issued (application money received) must not exceed the authorised capital.
⚠️ Consequences of Violation:
If share capital (issued + application pending) exceeds authorised capital:
Registrar of Companies (ROC) may not accept forms related to share allotment (like PAS-3).
Allotment of shares beyond authorised capital is invalid unless authorised capital is first increased by passing:
A Board Resolution,
A Shareholders’ Resolution (Ordinary), and
Filing Form SH-7 with ROC along with revised MoA.
Penalties under Section 450 of the Companies Act, 2013:
Company and officers may each be fined ₹10,000, and ₹1,000/day for continuing default.
✅ What You Should Do:
If you already have share application money that will exceed the authorised capital:
Increase the authorised share capital first by:
Amending the MoA.
Filing Form SH-7 with ROC.
Then proceed with allotment and filing Form PAS-3
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