Hi,

As per facts provided by you paid up capital is Rs. 5 Lacs and the amount you want to treat as share application money is Rs. 7 Crore.

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.

Making application to the company for allotment is just an offer pending acceptance from the company. Without acceptance the same would not be a binding contract for the company. Refer Indian Contract Act, 1872. Company reserves the right to reject the application and refund the share application money with or without interest as per the terms of acceptance of share application money.

However apart from the legality, in your case the difference i.e. difference between 5 lacs and 7 crore is quite big so the same may be questioned by ROC at a later stage.

Best Regards

Hi,

As per facts provided by you paid up capital is Rs. 5 Lacs and the amount you want to treat as share application money is Rs. 7 Crore.

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.

Making application to the company for allotment is just an offer pending acceptance from the company. Without acceptance the same would not be a binding contract for the company. Refer Indian Contract Act, 1872. Company reserves the right to reject the application and refund the share application money with or without interest as per the terms of acceptance of share application money.

However apart from the legality, in your case the difference i.e. difference between 5 lacs and 7 crore is quite big so the same may be questioned by ROC at a later stage.

Best Regards

As per my opinion this amount of 7 crore should not be treated as share application money. It may be treated as unsecured loan.

Amended provisions of share application money

Through MCA Notification dated December 14, 2011 Ministry of Corporate Affairs has amended few provisions regarding share application money which are as follows:

Any allotment of securities shall be completed within sixty days from the receipt of application money and in case the company is not able to allot the securities within the said period of sixty days, it shall repay the application money within fifteen days thereafter, failing which it will be required to be re-paid with interest at the rate of twelve percent per annum:

Provided that the monies received on such application shall be kept in a separate bank account and shall not be utilised for any purpose other than—

(i) for adjustment against allotment of securities; or

(ii) for the repayment of monies where the company is unable to allot securities.

Apart from the law above there are certain conditions of accepting share application money as per good governance like:

1. Proposal of accepting share application money should be considered in a board meeting.
2. Share application money form should be received from the prospective investor.
3. A proper share holder/ share application money agreement should be prepared before accepting share application money defining the terms of receipt, refund, interest rate etc.

So it is not advisable to suddenly consider any amount as share application money.

Regards

can i get formats documents of listed companies that are to be filed to SEBI

Hi Ankur,

Dharm this side, i have registered a pvt. ltd. company in feb 2010,

we are 2 directors, each holding 50% share.

now my friend(2nd Director) wants to quit the company , so i want to add my wife as a director in place of 2nd director & transfer his share to my wife.

Kindly tell me the procedure& fee for the same...

Thanks 

can anybody provide me the resolution for issue of equity shares with differential voting rights in a private limited company?

Thanks a lot Sir..........!! :) 

Thank you so much

Gr8 work Sir. Thank u very much.

Fab work

PLEASE SEND US THE DRAFT OF MINUTES OF DAILY BUSINESS TRANSACTIONS

Thank You CS Ankur....giving so much of your valuable time to us is just unbelievable...

hello sir , 

i am Ankur Sinha pursuing cs final as well as cs ipcc. i found ur notes and attachment are mindblowing specially your hand written notes. very very thankful to you sir and i'm really glad to be in this elite forum. keep helping sir because we need you!!

thank you !!!

Dear Sir,

kindly provide format of FORM 22A when the Shareholder is a Company.

thank sir you till now idont know format of share certificate