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Penalty for non refunding Share application money

Others 1765 views 2 replies

CA Pavithra S

Chartered Accountant

92 Points Joined April 2008

Hai,

I have question relating to FEMA and Co.s Act 1956,

If Company has received Rs. 10 Lacs as Share application Money from NRI and after 1 year also not allotted the shares to NRI. Is there any penalty for the company for non refunding the amount?

I want to know the provisions relating to this matter (both FEMA & Co Act)

Advance Thanks.

Replies (2)

CA Pavithra S

Chartered Accountant

92 Points Joined April 2008

please suggest me penalty for the above as per FEMA

Kumar

Legal Consultant

358 Points Joined September 2007

Dear Pavithra,

No provision of penalty is there in the FEMA.But company which had received such amount has not reported the amount received from the NRI then in that case compounding shall be attracted in terms of section 13 read alongwith section 15 of FEMA Act.

Under FEMA Regulation 6months time is given to allot the shares.If that is not the case then company has to return the money through the Authorised Dealer or bank.

regards,