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Authorised share capital & Share application money

Shikha (Business Analyst) (33 Points)

18 February 2008

Can in any FY, the total of paid up capital and share application money(as shown in Bal. sheet of a ltd. Co.), exceed the authorised capital ?

For exp. in FY 05,

Authorised share Capital = Inr 2 crs.

Paid up Share Cap. = Inr 1.5 Crs.

Share application Money = Rs. 1.0 Cr.

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In Fy 06, the authorised capital hs increased to Inr 2.25 crs.

Paid up Capital = Inr 1.75 crs.

Share application money= Inr 0.25 crs.

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Is ths acceptable under law?

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20 Replies

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 18 February 2008

whats a problem in this ?

CA Vikas Agrawal (Chartered Accountant ( Job)) (109 Points)
Replied 18 February 2008

yes it is acceptable, no problem at all

(Guest)

Is there any provision in the Companies Act, which authorises to accept (and hold and retain) proceeds received on account of Share Application Money, in the situation where company itself is not authorised to issue share being limitation of authorised share capital? A company has first to raise its authorised capital and then it can accept any share application money.

shyam (student) (544 Points)
Replied 19 February 2008

Nothing new. No problem in that

Radhika (Company Secretary) (1238 Points)
Replied 19 February 2008

the restriction is not for issue of shares it is for allotment of shares...a company has to first increase its authorised capital and then allot the shares...as far as issue & receipt of share application money is concerend..authorised capital has no relavance...

Moreshwar B. Panchal (C.A. Student) (30 Points)
Replied 19 February 2008

There's absolutely no problem.....

Kaustuv (Practicing CA) (1773 Points)
Replied 19 February 2008

thanks all for posting and answering this very very interesting question...really, CAclubindia is truly an outstanding place.. everyday you get something new to learn..

Vijay (CA) (254 Points)
Replied 20 February 2008

HI Paid up share capital and share application money cant exceed Authorised share capital. Authorised shae capital is maximum amount of share capital that a company can issue whereas paid up capital is out of subscribed capital that is paid by members. Share application money is money received against subscribed capital. So one can understand that if you want to show paid up as well as shae application money on the face of balance sheet, you have to first show paid up shae capital that is fully subscribed plus share application money. So in ur case it will come 0.50 croes + 1.00 crores. Thansk Vijay

Ashish Ranpara (TAX CONSULTANT) (369 Points)
Replied 20 February 2008

HI Paid up share capital and share application money cant exceed Authorised share capital. Authorised shae capital is maximum amount of share capital that a company can issue whereas paid up capital is out of subscribed capital that is paid by members. Share application money is money received against subscribed capital. So one can understand that if you want to show paid up as well as shae application money on the face of balance sheet, you have to first show paid up share capital that is fully subscribed plus share application money.

(Guest)

it si not matter until allotment of shares

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 21 February 2008

cooolllllll yar

(Guest)

my query is that- in a private limited company, can share application be more than authorised capital? also note that there is no intention to allot shares in future and just to show the money of company as share application money as internal adjustment.

(Guest)

Originally posted by :Guest
"	my query is that- in a private limited company, can share application be more than authorised capital? also note that there is no intention to allot shares in future and just to show the money of company as share application money as internal adjustment.	"