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share application money

vineeth (Sr Assocoate) (35 Points)

19 March 2010

Can in any FY, the total of paid up capital and share application money(as shown in Bal. sheet of a ltd. Co.), exceed the authorised capital ?

For exp. in FY 05,

Authorised share Capital = Inr 2 crs.

Paid up Share Cap. = Inr 2 Crs.

Share application Money = Rs. 1.0 Cr.

is there any problem please tell me

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17 Replies

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 19 March 2010

Vivek Angrish (Manager Finance & Accounts) (232 Points)
Replied 19 March 2010

No, how can it happen, that the paid up capital and the share application exceeds the amount of authorized capital, as only those no. of shares can be issued as mentioned in the authorized capital and not more than that and if one wants to issue more shares, then first the authorized capital is to be increased.

pallavi gujrati (Chartered Accountant) (21 Points)
Replied 19 March 2010

No, its not possible at all.....paid up capital and share application can never exceed authorised capital.

CA Nilesh Thakker (1) (112 Points)
Replied 19 March 2010

Share Application Money and Paid up share capital can be exceed of Authorised share capital. But paid up capital can no be more than Authorised share capital.

CA Shiv (Business Controller) (2987 Points)
Replied 19 March 2010

Paid up share capital and share application money cant exceed Authorised share capital. Authorised share capital is maximum amount of share capital that a company can issue whereas paid up capital is out of subscribed capital that is paid by members. Share application money is money received against subscribed capital. So one can understand that if you want to show paid up as well as shae application money on the face of balance sheet, you have to first show paid up share capital that is fully subscribed plus share application money.

So it wil be 1 + 1........

CA Nilesh Thakker (1) (112 Points)
Replied 19 March 2010

I appreciate your answer Shivang, but it is not always that company has to allot shares out of share application money, to be honest with you, law is silent about receipt of share application money over and above authorised share capital, I do not know whether this is apllicable to Ltd co also, because many pvt. ltd. cos. have share application money and paid up share capital above its authorised share capital and whenever co needs its increases its Authorised capital and issue new shares. so, it is clear that co can have share application money above its Authorised capital.

In FEMA co. has to allot shares within six months from the date of receipt of share application money.

Please clear my view if necessary.

CA Shiv (Business Controller) (2987 Points)
Replied 19 March 2010

Yes nilesh i understand your point. But i think the question is just a presentation poiint in Balancesheet. And as per Company law, its not possible to show paid up and application money more than authorised capital.

Authorised capital means the amount which is stated in Capital clause of Memorandum of Association as the share capital of the company. This is the maximum limit of the company which is authorised to raise and beyond which the company cannot raise unless the capital clause in memorandum is altered.

One more interesting fact.

If the company has issued shares and its over subsribe than there are chances that paidd up capital and appication money will definately exceed. as they have to settle the amount in next 12 months.

So presentation will be : Normal for paid up capital and Application money in excess is to be shown below reserves and surplus in balancesheet...

I hope m clear.... Please can correct me if m not...

Sumiti Jain (FP) (1364 Points)
Replied 19 March 2010

yes i agree with Shivang

CA ROHIT KUMAR SAMAR (Chartered Accountant) (194 Points)
Replied 19 March 2010

I dont see any problm in showing amount of share app+ Paid up cap > Authorised cap

it is not prohibited anywhere.

Correct me if i am wrong

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 March 2010

Hello,

As per the figures provided by you it is 100% possible. There is no doubt about that.

A company can accept Share application money over and above the authorised capital.

But in your case allotment of equity share against the share application money is not possible without increasing the athorised capital.

Share application money is not a part of paid up capital of the company.

Best Regards

1 Like

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 19 March 2010

please see the earlier discussion

/forum/company-autorised-capital-66107.asp

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 19 March 2010

Issue cannot be brought if authourised capital is fully exhausted.. ! so how a shareholder will get application for share subscripttion? thus, its not possible for the company to issue shares over & above authorised capital..

Only in 1 case it is possible - if these share application money are related to earlier issue & were received before the last allotment... so after completion of allotment that share application money due to over subscripttion were not refunded because of the last date as per time limit to return the same is falling in the month after the date of closure..!!