Share capital vs share application money - reg

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Querist : Anonymous

Querist : Anonymous (Querist)

19 July 2012 Dear Experts,

Good Evening...

We are Pvt Ltd company, asper our balance sheet as on 31-3-2011 FY(2010-11),
we have Authorised Share Capital Rs.10Cr Issued share capital Rs.9.01Cr
Share application money Rs.10.62Cr,
My Query 1) whether amount wise issued share capital vs share application money is right or wrong.

If wrong, what we have to do to rectify the same in FY 2011-12

Query 2) whether amount wise authorised share capital vs share application money is right or wrong.

If wrong, what we have to do to rectify the same in FY 2011-12

Can you please guide me

With regards
R Saravanan

Adv. Rajesh Chhangani

Adv. Rajesh Chhangani (Expert)
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19 July 2012 Hi,

I case of Private Limited Co. the Act is silent in case of accepting Share Application Money, but as per normal practice one should allot share application money within 180 days from accepting the same. In your case you have to increase your Authorised Share Capital first later you can allot the shares.

In Balance sheet the share application money pending allotment should be treated as current liabilities till the allotment.

The amount wise all situations were right if you follow the above general rules.

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Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2012 Dear Mr.Rajesh,

If we may not alloted the share after 180 days, long long we can hold the money with us.

If we are not in a position to increase the authorised capital, shall we refund the money to them, whether we have pay with interest or not

Adv. Rajesh Chhangani

Adv. Rajesh Chhangani (Expert)
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20 July 2012 Hi,
Mr Anonymous, Kindly look, frankly saying the Companies Act, 1956 is silent in case of Share Application Money in Private Limited Co. There were lot of contrary views in discussion about share application money.

You can kept such SAM in current liabilities (but not in share capital). And the Interest on such amount shall be regulate by the mutual agreement between Co and Alottes. You can pay if decided. And it is not mandatory to refund the same within 180 days (I said it is a general practice not compulsion).

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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20 July 2012 First of all the company can not accept share application money more than its authorised capital. It has to return the application money or increase its Authorised Share Capital.

Secondly, in case of unlisted public companies, Ministry has issued a notification in dEcember 2011 and mandated that the company cannot keep share application money more than 60 days.

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