Initial subscription in cash

I have something different answer

A private company may issue securities—

(a) by way of rights issue or bonus issue in accordance with the provisions of this act,

(b) through private placement by complying with the provisions of Part II of this Chapter.

as per section 42(5) All monies payable towards subscripttion of securities under this section shall be paid through cheque or demand draft or other banking channels but not by cash.

Hence in my opinion it cannot be in cash

Thanks 

with best regards

Dear Kumar Prohit,

Section 42 is applicable only in case of Private Placement. No doubt in case of Private Placement, because of Section 42(5), the amount can not be received in Cash.

However, the question is whether "Initial Subscripttion" can be via cash. Section 42 does not apply to subscripttion to shares at the time of Incorporation. As far as I know, there is no restriction for the form of capital contribution at the time of Incorporation.

Sec 42 requires the amount to be brought through bank channels only. But what can be the logic if initial subscripttion can be bought in cash? Then, can that be a way on making the black into white? Y it s mandatory to bring through bank channels?

Thnku sir.

Thnku sir.

I agree with Saket. No provisions which mandates to bring subbscribers money through Bank.

yes

Initial Subscripttion is different from the Private Placement as the latter is done after the company has been incorporated and the former is a part of the process of incorporation. Thus, Section 42 (5) is not applicable in case of Initial Subscripttion. However, we do not advise our clients to bring in subscripttion money in cash. In the absence of any specific provisions, we do refer to other section guidance.

Thanks

With Best Regards

yes

Initial Subscripttion is different from the Private Placement as the latter is done after the company has been incorporated and the former is a part of the process of incorporation. Thus, Section 42 (5) is not applicable in case of Initial Subscripttion. However, we do not advise our clients to bring in subscripttion money in cash. In the absence of any specific provisions, we do refer to other section guidance.

Thanks

With Best Regards