Investment under section 372A

Sec.372A regulates the following transactions:
1. Making any loan to any body corporate.
2. Acquiring the securities of any other body corporate.
3. Giving any guarantee or providing any security to:
a. A person who gives a loan to any body corporate; or
b. A body corporate which gives a loan to any other person.

I think the "share application money pending allotment"  covers under acquiring the securities of any other body corporate so the amount will be added for the purpose of Section-372A.

No. share application money will not count for investment till shares not alloted

As per this section the previous approval is required.So i think when some one is making application for allotment of shares then previous approval is required as well as the whole of the share application money will be considered for calculation the limit.

No… share application money pending allotment' will not be counted as 'Investment' for the purpose of Section 372A(1)(c).

Reason being Section 372A(1)(c) is about “acquisition of securities” of any other body corporate by way of subscripttion, purchase or otherwise. Receiving share application money in no way equal to “acquisition of securities”.

Thanks

Dear Ankur Sir,

Thank You.

Our's is a closely held public Company. The investments made by the Company during the current and the previous financial years need previous authorisation by a Special Resolution passed in general meeting.

The same has not been done and no forms (Form 23) have been filed with ROC for registration of Special resolutions.

Now, kindly clarify,

- If I update the previous General meeting minutes to include the authorisations aforesaid, there is no default of Section 372A and as Forms have not been filed penalties mentioned under Section 192 only gets attracted. Am I correct?

- If I file all the necessary forms with late fee, am I still liable for penalty mentioned under Section 192(5)?

- A specific Special resolution must be passed for every Inter-Corporate Investment/guarantee in excess of the limit, which require separate Form 23s for each investment/guarantee, unless the date of events are within 30 days from the previous event. Am I correct?

Hope I am clear.

Regards,

Originally posted by : Pankaj Arora
	No. share application money will not count for investment till shares not alloted

Agree....

No dear it is clearly vmentioned in SEc 372A that share application money will not be taken in to account.

I know it is not considered when calculating the capital employed. But i think she is asking whether it is included in Investment limit u/s 372A. Correct me if i am wrong...

Thanks

Acquisition by way of subscripttion, puchases or otherwse of the securities of any other body corporate falls within the ambit of section 372A, Share application money paid on application for shares in another company will notcome within the purview of this section. 

Once Shares have been allotted then only it will counted as Investment!!

Here share application money pending allotment is not creating any Shares or Securities so no any investment.

Thanks all of you for updating my knowlede.

Originally posted by : Kiranmayi
	Our's is a closely held public Company. The investments made by the Company during the current and the previous financial years need previous authorisation by a Special Resolution passed in general meeting. The same has not been done and no forms (Form 23) have been filed with ROC for registration of Special resolutions. Now, kindly clarify, - If I update the previous General meeting minutes to include the authorisations aforesaid, there is no default of Section 372A and as Forms have not been filed penalties mentioned under Section 192 only gets attracted. Am I correct? - If I file all the necessary forms with late fee, am I still liable for penalty mentioned under Section 192(5)? - A specific Special resolution must be passed for every Inter-Corporate Investment/guarantee in excess of the limit, which require separate Form 23s for each investment/guarantee, unless the date of events are within 30 days from the previous event. Am I correct?

Simply update the previous General meeting minutes to include the authorizations, in order to remove the default of section 372A. Accordingly file form 23 for regn of special resolution with late fee.

If you file all the necessary forms with late fee, you won’t be liable for penalty mentioned under Section 192(5).

Regards