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Share application money paid by company

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Arun C Mathew

manager

26 Points Posted on 16 March 2014

Sir,

I was a Director in Private Ltd Company and paid an amount of 5 lakhs as share application money via account payee cheque in year 2005 . No other papers are available with me since i was the majority shareholder. The Managing Director by issuing shares to himself has taken control of the company and its assets and the case is now pending before CLB. Now when the case came before CLB, MD is claiming another payment of 7 lakhs came from another company (owned by wife of MD) as share application money of his.

My queries are this can another person or entities payment be claimed as ones share application money. Is there legal provisions in Company Law regarding the same.

Replies (1)

P C Agrawal

Registered independent director Past Ch

5233 Points Posted on 18 March 2014

One will have to go into details of the case and all relevant documents for giving any comments. What are provisions in Articles of Association for issue of further shares? When Rs.7 lacs were received and when allotment was made? What returns were filed with ROC and how the money received was shown in Balance Sheet? What was recorded in minutes of Board meeting? etc. etc.

Subject to provisions of the Articles, Board resolution is required for allotment of shares and also for issuing share certificate under common seal of the company. You may pl discuss the case with your consultant and take suitable action.

Thanks