Share application money

Dear All,

A company(private, unlisted)  has received some money and it has shown the same in share application account for the last 3 months, pending allotment. The company shall refund the money as it doesnt want to allot shares to the same.

 

Please let me know the recording of the same in the minutes of the company and also that is there any interest payable on share application money lying with the company pending allotment?

also, can a private company accept Inter corporate loans.

Replies (7)

Hi,

The Company can make refund of the share application money after simply recording the reasons for non-requirement thereof. It is not required to pay interest on the share application money (interest are payable only on Calls in Advance provided AOA of the Company provides for the same)

Re Inter corporate loans/advances, provisions of Section 372A are not applicable to a private company.

Comments of other professionals are requested.

Thanks

CS Ashwini Kumar

Agree with Ashwini.

Originally posted by : cs ashwini kumar


Company can make refund of the share application money after simply recording the reasons for non-requirement thereof. 

It is not required to pay interest on the share application money (interest are payable only on Calls in Advance provided AOA of the Company provides for the same)

Re Inter corporate loans/advances, provisions of Section 372A are not applicable to a private company.

Thanks. So I believe that when the funds have come to the Company we shall record the same in BMinutes and when the company refunds the same we shall record it once again in the BMinutes.

 

Also to ask, can both these transactions be recorded in the same BMinutes?

Well, If the calling of application money is done some where back... Board can note that they received funds and now after some appraisal or by whatever reason in your case they think to refund the same.

Its a Board matter they have power to decide...to to run business...

 

However, plz take care to incorporate some suitable justifiaction, though no-body can look in BM directly, still it looks ODD.

 

Regards

Jaideep Pandya

Private companies can accept incorporate loans.  The limits / provisions specified in Section 372A with regard to intercorporate loans are not applicable to a Private company.

agree with ashvini

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