Share issue before receiving consideration

can u tell me that what times have been gone from the date of issue of shares?

As far as ROC is concerned there is no problem coz their is no process to trace the amount of allotment from ROC.

However for correct accounting treatment--- amount should be collected from the director concerned as early as possible.

Revert if there is any doubt.

akash , as far i understand from your query , your company has made allotment to the director on private placement .

Now , Receiving consideration has nothing to do with issue . You can issue shares and later receive the amount as per your call process.

Here , Check if form 2 has been filed . and issue shown in it , the actual one or that by the auditor ????

If your director is willing to take the extra issue shown , then ders no probs , u can later receive the consideration. Receiving consideration is not a bar for share issue.

other views please !!!

Form 2 has been filed and therefore shares have been issued to the directors. 

Now the problem is that the bank accounts of the company show no such transaction of receiving the amount/ consideration for the shares. 

Can it become a problem later with the tax authorities to the company or the director? and how to sort out this situation.. 

ok, so the form2 has been filed with the increased vol of shares to director.

then , as said ny Ankur sir,as far ROC is concerned there no prob coz ders no procedural or requirement in ROC  to trace the amount of allotment. so ur are on safer side as far ROC.

as said earlier receiving amount on allotment can be before or after allotment as the company decides. Receiving amount later after allotment thru bank channels is no wrong as far accounting treatment or ROC matter is concerned.

the accounting process goes like : here , u made the allotment ( no amount in bank ) ;after, u make call on shares den u recieve amount in the bank account and at that point u show the entry in your books as received amount. If u don't receive the amount after call its shown as Calls in Arrears . So whats wrong u expect as far tax authorities or the director . i don't find any wrong in it.

other views !!!

Originally posted by : Akaash
	Form 2 has been filed and therefore shares have been issued to the directors.  Now the problem is that the bank accounts of the company show no such transaction of receiving the amount/ consideration for the shares.  Can it become a problem later with the tax authorities to the company or the director? and how to sort out this situation..

Don't repeat the problem again and again. Simply collect the amount from director and deposit the same into the bank account of the company. Don't take tension buddy.

Regards

From the next time, Keep in mind that,

In any case No shares can be issued without reciveing the Consideration in Part or in toto.

Because, Share application money has to be deposited with the Company for the allotment of the Shares.

And Share is not the Grain/Vegatable or other thing that you can purchase the same on the Credit baisis.

Answer to ur Problem.

No need for taking the Back dated Cheque.

Make the Cash entry for the Transaction.

Moreover, If u will see there is a Column in the Form 2, about the amount recived for the share allotment.

So, Make the entry for that amount, which have been shown in the Form 2.

-------------------------------------------

If you need further clarification than contact me

CS Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankur @ csankur.com, ankurjewel @ gmail.com

Blog: csankur.blogspot.com

Website: www.csankur.com

@ ankur shah

i cannot receive more than 20000 in cash as share application money. it is against the income tax rules and under section 269, any deposit > 20000 has to be through cheque, else there is a penalty levied on it.

and share application money is taken as a deposit as per a supreme court judgement on a similar issue.. 

my concern is, that the allotment has been done ( form 2 has been filed), now how to minimize any damages in case the books are scrutinized.. 

as far as i know, the provisions relating to preferential allotment state that the consideration for the shares need to be paid in advance i.e. before the allotment of shares.

it would be better if you take a back-dated cheque from the concerned Director, if possible.

Loophole of the 20000 Limit.

Eg.

If 1 Director has to pay the Company Rs. 100000 and the Share allotment date is 24/4/2010.

then the Director will pay that amount in the cash as follows:

19/4/2010= 20000 cash

20/4/2010 = 20000 cash

21/4/2010 = 20000 cash

22/4/2010 = 20000 cash

23/4/2010 = 20000 cash

Problem solved.

Plz keep in mind that behind  every rule of the Govt. there is a Loophole

-------------------------------------------

If you need further clarification than contact me

CS Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankur @ csankur.com, ankurjewel @ gmail.com

Blog: csankur.blogspot.com

Website: www.csankur.com