LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Share Application

Jitendra Kumar (Proprietor) (24 Points)

28 July 2010

Dear Professional Colligue,

Please give your opinion that "Can a company take Share Application Money without Increasing Authorised Share Capital if Paid up capital is equal to Authorised Share Capital."

Thanks & Regards

Reply
Follow
Share

2 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 28 July 2010

Hi,

As per my personal opinion receipt of share application money over and above of Authorised capital is not a default at all. Reason being share application money is not in the nature of paid up capital unless and until allotment of share against the share application money.

In other words only after allotment of share you can consider such share application money as paid up share capital. But before passing allotment resolution you have to increase your Authorised capital.

Making application to the company for allotment is just an offer pending acceptance from the company. Without acceptance the same would not be a binding contract for the company. Refer Indian Contract Act, 1872. Company reserves the right to reject the application and refund the share application money with or without interest as per the terms of acceptance of share application money.

Best Regards

2 Like