Non Receipt of Subscription Money after incorporation

Dear Members,

Company formed. A, B & C held 1000 shares in a Pvt Ltd Company. Now after incorporation C refuses to deposit the subscripttion money into the bank. Now what will be the accounting treatment for unpaid share capital.

Is there any capital reduction impact on paid up share capital?

Can we file the form INC-20A commencement without unpaid shares?

Thank You in advance.

Replies (2)
Quick Summary
A company has been formed, but one subscriber is refusing to deposit their share subscription money. This discussion explores the accounting treatment for unpaid share capital and potential impacts on paid-up capital and capital reduction. It also addresses whether Form INC-20A can be filed without these funds and clarifies that unpaid subscription money is a debt due to the company, with significant penalties for non-compliance under the Companies Act, 2013.

Subscripttion money not received after incorporation. Things cannot go forward.

it will be considered as breach of contract by the subscriber and may attract civil action for this As per section 10(2) of the Companies Act, 2013, all monies payable by any member to the company under the memorandum and articles is a debt due from subscriber to the company, therefore the subscriber cannot refuse to pay the subscripttion money, once the Memorandum is registered

Section 10A also prescribes heavy penalties if subscribers to the Memorandum don’t pay the subscripttion money within 180 days from the date of incorporation, or the officer in charge doesn’t file the return.

  1. A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement, and
  2. Every officer in default shall be liable to a penalty of Rs 1,000 per day for each day during which the default continues subject to a maximum of Rs 1,00,000,

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