Time limit for allotment of shares

In case of a unlisted public company what is the time limit for allotment of shares after receiving share application money.If there is any time limit or rules kindly refer any sections/case laws and also please refer the sections for non-compliance of same. 

Replies (3)

Please find below the relevant and highlighted clause regarding amendment in Share Application Money provisions:

 

Rule 8 of Unlisted Public Companies (Preferential Allotment) Rules, 2003, regarding Invitation and allotment of securities.-

 

(1) No fresh offer or invitation shall be made unless the allotment with respect to any offer or invitation made earlier have been completed in terms of sub-section (9) of section 60B of the Companies Act, 1956.

(2) Any offer or invitation not in compliance with sub-section (1A) of Section 81 read with sub-section (3) of section 67 of the said Act, shall be treated as a public offer and the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall be complied with.

 

(3) All monies payable on subscripttion of securities shall be paid through cheque or demand draft or other banking channels but not by cash.

 

(4) Any allotment of securities shall be completed within sixty days from the receipt of application money and in case the company is not able to allot the securities within the period of sixty days, it shall repay the application money within fifteen days thereafter, failing which it will be required to be re-paid with interest at the rate of twelve percent per annum:

 

Provided that t he monies received on such application shall be kept in a separate bank account and shall not be utilised for any purpose other than—

 

(i) for adjustment against allotment of securities; or

 

(ii) for the repayment of monies where the company is unable to allot securities.

 

(5) No company offering securities shall release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about such an offer.

Dear Experts,

whether an ulisted public company having share application money pending for allotment for last 3 years will come under the ambit of the above circular.

please guide

what about in case of private placement of shares in unlisted public company? Do the same rules apply?

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