Time to deposit money for shares by director in bank a/c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2011 Dear Sir/Madam,
Could you please let me know that how much time will director get to deposit share money (for subscribing shares in Pvt. co.) in to bank a/c of company after incorporation....

is there any time limit in corporate law?

Thanks....

Jayashree S Iyer

Jayashree S Iyer (Expert)
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08 June 2011 As per subscription clause in the MOA, the subscriber / director undertakes to take specified number of shares. On incorporation, the company can open an account with the Bank and after such account opening he must deposit the money in the Company's Bank Account.

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2011 Thanks sir,
But I want to know is there any time limit for deposit share money into bank a/c or we can deposit the same any time...

Please guide...

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Great question!

**Under the Companies Act, there is no specific time limit prescribed for directors or subscribers to deposit the share subscription money into the company’s bank account after incorporation.**

However, here are some practical and legal points to consider:

* **Subscription Agreement (MOA)**: The Memorandum of Association (MOA) usually contains the number of shares each subscriber agrees to take. The payment is expected to be made "as agreed," but the Act doesn’t specify an exact deadline.

* **Company’s Articles & Board Resolutions**: Sometimes, the Articles of Association or Board resolutions may specify a timeline for payment of share money.

* **RBI and Foreign Exchange Rules**: If the shares are being subscribed by a foreign entity or foreign nationals, RBI regulations require allotment and receipt of money to be completed within 6 months from the date of receipt of application money, failing which the amount must be refunded.

* **Practical Note**: Usually, companies request the share subscription money to be deposited **before or at the time of allotment of shares**. Delaying this can create complications for the company, such as inability to credit the share capital or comply with statutory requirements.

* **Consequences of Delay**: If the money is not paid in a reasonable time, the company may cancel the allotment or take legal action depending on its Articles.

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**Summary:**

| Aspect | Position |
| -------------------------- | ---------------------------------------------- |
| Companies Act | No fixed time limit prescribed |
| MOA/Articles | May specify timelines |
| Foreign Shareholders (RBI) | Allotment & payment to be done within 6 months |
| Practical Practice | Payment expected at or before allotment |

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