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2011

Kiranmayi (Company Secretary) (37 Points)

16 March 2012

What should companies who have already accepted share application money till 13th December 2011 do?

Do they have to allot shares within 60 days from the date of notification?

Regards,

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6 Replies

(Guest)

Yes the Company should allot Shares within 60 days, failing which they need to refund the share application money within 15 days after the expiry of 60 days. & this rule doesnot apply to Private Limited Companies.

Regards

Sriram

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 16 March 2012

Rules are silent about the treatment of application money received before amendment.

However as per my understanding also you should allot shares within 60 days of amendment in the Rule 8 of Unlisted Public Companies (Preferential Allotment) Rules, 2003.

Regards

Ankur

(Guest)

In the absence of expressed provision, my opinion is there is no harm or difficulty even if we do not allot shares in 60 days for application money recd before 13.12.2011.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 18 March 2012

Yes, the Rules are silent on the share application money already accepted. It may not be possible in many cases to apply the same in totality to share application money already accepted. For example, the Rules provide for keeping the money in separate Bank account and non-utilisation thereof till allotment. What if the company has already deposited the money in normal bank account and used the amount for business purpose? It cannot be said to be in violation of the Rules now. Though strictly speaking not necessary, keeping in view the intention of the government and also good corporate governance practice, it will be better if allotment is made at the earliest.

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prakash (Company Secretary) (1352 Points)
Replied 19 March 2012

there are no explicit provisions regarding acceptance of share application money prior to this amendment in the notification, so I opine that there is no harm in not alloting shares with in 60 from date of notification.

Anshu Shrivastava (company secretary) (143 Points)
Replied 19 March 2012

yes since there is no specific provisions regarding the usage of application money and allotment of shares prior to the date of notifiaction. There seems to be no harm in not having complied with the said requirement.