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Query regarding for adt-1 & subscription money

kapil (-) (809 Points)

17 August 2015

Respected members, I have following confusions/queries withh regard to a new company, Request you to please resolve it:-

1)Do we need to file ADT-1 for appointment of First auditors too?

2) A company incorporated last year failed to open a bank account till now and consequently have not received subscripttion money. Can a company receive such money in cash? Is there any consequences/penalty for receiving such sum in cash?

-Thanks

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2 Replies

prakash (Company Secretary) (1352 Points)
Replied 17 August 2015

Kapil,

Filing of ADT-1 is not mandatory for appointment of first Auditor by Board of Directors within one month from date of incorporation But IT IS GOOD SECRETARIAL PRACTICE TO FILE ADT-1.

Nothing was stipulated about receipt of subscripttion money,time frame or opening of bank account in Companies Act, however general practice is that Company open bank account and subscripttion money gets credited into that account. hence as such no penlties were prescribed in the ACT.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 19 August 2015

Companies Act 2013 does not prohibit getting share subscripttion money from initial subscribers in cash. Sec.269SS of IT Act 1961 also is not applicable in this case. Hence there is no penalty if cash is accepted. However, considering policy of the government to discourage cash transactions and as a matter of good corporate practice it is advisable to get subscripttion money by cheque.