Company autorised capital

Originally posted by : Ankur Garg
	As per my opinion receipt of share application money over and above of Authorised capital is not a default at all. Reason being share application money is not in the nature of paid up capital unless and until allotment of share against the share application money.   In other words only after allotment of share you can consider such share application money as paid up share capital. But before passing allotment resolution you have to increase your Authorised capital.

Dear Mr. Ankur Garg,

I agree with your reply but s there any sort of case law substantialting this view?

If in the above circumstances, the company treats the excess application money as interest free unsecured advance to be adjusted against allotment after raising the Authorised Capital and obtain an undertaking from the applicants that they will not withdraw the excess amount till allotment,will it be in order?