Subscription amount

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Revati Sathe (Querist)
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24 November 2014 (i) Can a subscriber to MOA of a private limited Company can deposits subscription amount in cash and
(ii) is it allowed to open a bank account after 5 months from the date of incorporation
(iii) is it necessary to file MGT-14 for disclosure of interest by all Directors at the First BM

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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24 November 2014 1. No.

2. No.

3. yes

Revati Sathe

Revati Sathe (Querist)
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24 November 2014 Thanks for your prompt reply , but please may I know if the company has already opened bank account after 5 months and one director deposited in cash ,
How to certify Form INC-21 and what will be next proceeding

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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26 July 2025 Here’s a detailed answer to your follow-up queries:

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### (i) Can a subscriber to MOA of a private limited company deposit subscription amount in **cash**?

* **No**, as per the Companies Act, 2013 and RBI guidelines, subscription money **cannot be accepted in cash** if it exceeds ₹20,000.
* Subscription amount **must be paid by cheque, demand draft, or online transfer** into the company’s bank account.
* This is to ensure transparency and to prevent cash transactions that could lead to money laundering or tax evasion.

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### (ii) Is it allowed to open a bank account after 5 months from the date of incorporation?

* Ideally, the bank account should be opened **immediately or within a reasonable time** from the date of incorporation to deposit the subscription money and carry out business operations.
* However, **there is no strict legal bar** on opening a bank account after 5 months, but **delays are discouraged**.
* Delays in opening a bank account can lead to operational difficulties and non-compliance with statutory requirements (e.g., depositing subscription money, making payments, etc.).

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### (iii) Is it necessary to file MGT-14 for disclosure of interest by all directors at the First Board Meeting?

* **Yes**, filing **MGT-14** is necessary when there is a resolution to be passed by the Board regarding the **disclosure of interest by directors** under Section 184 of the Companies Act, 2013.
* This applies especially if the disclosure is part of a special resolution or related to matters requiring filing with the Registrar of Companies (ROC).
* Usually, disclosure of interest is noted in the board minutes, and filing MGT-14 depends on whether the resolution is a board resolution or shareholders’ resolution. For directors’ disclosures, board resolution is passed but **MGT-14 may not always be mandatory unless specified**.
* However, as per your query, if filing is required by your company’s interpretation or ROC instructions, you must comply.

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### Your specific case:

* The company **already opened bank account after 5 months** — this is not ideal but not illegal. The bank and ROC may ask for explanation if required.
* One director **deposited cash** — this is non-compliant if amount exceeds ₹20,000.
* Regarding **Form INC-21 (Return of Allotment)** certification:

* The form must be certified by the **Company Secretary or Director**.
* The certifier must mention that the subscription amount has been received as per legal provisions.
* Since cash payment was made, the certifier may mention the facts but highlight non-compliance.
* **Next steps:**

* The company should regularize by transferring cash to bank account ASAP.
* Maintain proper records for the source of cash payment.
* Ensure future payments are made only by non-cash modes.
* Disclose this in Board minutes and take necessary approvals.
* Consult ROC or professional for any penalties or further compliance.

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If you want, I can help you draft a note for certifying Form INC-21 mentioning this situation properly. Would you like that?

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