Subscription amount

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Revati Sathe (Querist)

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)

24 November 2014 1. No.

2. No.

3. yes

Revati Sathe

Revati Sathe (Querist)

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

(Expert)

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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