Share Capital & Loan Amount given vide single cheque

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Dinesh Dubariya (Querist)
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25 April 2020 Dear Sir/Madam,

This query is regarding "Subscriber's proof of payment for value of shares" to be attached in INC-20A. The problem is subscriber has given share capital amount & loan amount together vide a single cheque payment.
So, the bank statement entry is not matching with share capital but it is more than share capital.

Is this allowed under the Companies Act, 2013?
Can this be problem?

Regards,
Dinesh Dubariya

PARAS CHHAJED

PARAS CHHAJED

(Expert)
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28 April 2020 Subscription to share capital is to be credited to a separate bank account

Dinesh Dubariya

Dinesh Dubariya (Querist)
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29 April 2020 It's a small private limited company.
Can you please explain me the ideal process, how it should have been done?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Sure! Here’s how the **ideal process** should work for handling share capital and loan amounts when received from a subscriber in a private limited company:

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### Ideal Process for Receipt of Share Capital & Loan Amount

1. **Separate Bank Accounts**

* **Share Capital money** must be received and deposited into the company’s **Share Capital Bank Account** (a designated bank account for share capital subscription).
* **Loan amounts** (like loans from directors or members) must be deposited into a **separate bank account**, often referred to as the **Loan Account** or **Company’s General Bank Account**.

2. **Separate Payments**

* The subscriber/shareholder should ideally issue **separate cheques** for share capital and for loan amounts.
* If a single cheque is issued covering both amounts, the company should immediately deposit the cheque and then internally **transfer the portion corresponding to share capital to the share capital account** and the rest to the loan account, with proper accounting entries to reflect this.

3. **Accounting Entries**

* **On receipt of cheque:**
Debit Bank A/c (for full amount)
Credit Share Capital A/c (for the share capital portion)
Credit Loan A/c (for the loan portion)
* This ensures clear segregation in books and statutory records.

4. **Subscriber’s Proof of Payment for INC-20A**

* For filing INC-20A, **proof of payment should clearly show the amount paid towards share capital only.**
* Ideally, the bank statement or challan reflecting the share capital bank account should match the amount of share capital subscribed.

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### Why is this important?

* **Statutory compliance:** MCA expects clear proof that the subscriber has paid the value of shares separately and distinctly.
* **Audit and transparency:** Mixing loan and share capital amounts complicates accounting and auditing processes and may raise compliance questions.
* **Legal clarity:** Share capital and loans are different in nature — the former is ownership funds, the latter is liability — and must be treated separately.

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### If already received via single cheque:

* Immediately create accounting entries to segregate the amounts.
* Maintain internal documentation (board resolutions, journal vouchers) for this segregation.
* Ensure that when filing forms like INC-20A, the proof submitted corresponds to the share capital part alone.

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If you want, I can help draft journal entries or sample resolutions for this. Would you like that?

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