Share Application Money

Dear All,

Share application money in a private limited can be returned in a phased manner as described above as long as the applicant is not pressing for immediate payment.

However , in al listed company , it has to be refunded within the time specificed by SEBI guideline.

There is no restriction or bar under the Companies Act for the refund of share application money by a private limited company within a time frame as in the case of listed companies.

You have to refund the share application money only by way of cheque or demand draft as per Income-Tax  Act.

During the assessment proceedings , IT department may ask for the details for share application money and you have to substantiate that it was kept pending for long time as the Board has not decided to allot shares .

Sometimes, where application money is not allotted and the spill over happens over next financial year, there are possibilities that it may be viewed as advance amount. One may  have to consider this aspect as well...

R.V.Seckar

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Hello Friends,

A pvt ltd company has a authorise share capital of  Rs.1lakh and this is fully paid up. Then again company made issue of shares and received 50 lakh as share application money before increasing the authorised share capital. The shares has been not alloted.

My question is  can the company now increase the authorise share capital and allot the shares?

hello frnds,

     plz  give the ans abt my query ie. how much period a co can hold share application money without issuing shares? & its conceqwences?

                                                                                                                    regards

                                                                                                              shashi raj jajware

hello frnds,

     plz  give the ans abt my query ie. how much period a co can hold share application money without issuing shares? & its conceqwences?

                                                                                                                         regards

                                                                                                               shashi raj jajware

Hey Please let me know the treatment of share apllication money pending allotment in calculating the detbt equity ratio.i.e, should it be considered as a debt or as a part of share capital????

can unallotted share application money transfered to loan a/c?

unallotted share application money should not be transfered to loan a/c as law specifically says that it should not be utilised until allotment.

Dear Mr. Srinivasaraghavan, thanks for your valuable infomation - Muthukrishnan D

Hi

A company has received share application money of Rs. 2500000/- in F.Y. 2011-12.

On 31.03.2012, it completed more than 6 months without allotment of shares.

Now as an auditor can i suggest to forfeit to the said application money in books. IF YES?

WHAT WILL BE THE ENTRIES IN BOOKS AND TAX TREATMENT FOR THE FORFEITURE AMOUNT????? 

If No? what will be the treatment, if i want to clear the application money from the books???

As per the revised schedule VI,  excess share application money received and which is due for refund, should be shown under the head "Other Current Liabilities" alongwith interest accrued thereon,if any.

Dear experts,

Thanks for your valuable comments.

In this connection, I have just one more query.

As per revised Schedule-VI,if a company receives excess share application money, it has to specifically state in the Balance Sheet whether it has sufficient Authorised Capital resulting from allotment of shares against share application money.

In view of the above, can a Pvt. Ltd. Company retain the excess application money till allotment or it has to immediately refund the same ,if its authorised capital is already equal to its Paid-up Capital ? Will it be better to show it as an interest free unsecured advance to be adjusted against Share Capital and obtain a declaration from the shareholders that they will not withdraw the money till allotment.

I shall be much obliged , if you would kindly express your views with reference to the latest provisions of the Companies Act to be read with the Income Tax act.

mca filing fees where debited in books?

Excess share application money beyond authorised capital should be shown in ‘Other current liabilities’ in new schedule VI format.

Originally posted by : Balasaheb
	mca filing fees where debited in books?

If its a big size company and have lot of expense account in "Indirect expenses" head than separate account can be opened for this account. However, you need to maintain separate account in case annual expenditure of same nature is‘1% of revenue from operations or Rs.100,000 whichever is higher’ .

For small companies, where MCA fee is not much, I suggest Rates and taxes account for this purpose.

we need to submit the share application confirmation to income tax how it will draft