Treatment of Share Application Money

Dear Pawan,

There is no time limit in which share application money to be utilized for allotment as per companies Act 1956, for Pvt Companies.

But, As per RBI/FEMA guidelines the application money to be utilized for allotment with in 6 months otherwise it should be refunded.

Unsecured loan of previous year can be shown as share application money, provided the Company resolve so, on fulfilment of other requirements.

hi,

i have seen a similar case which came in a scrutitny after few years that department says that money is not for share application and it was loan and we furnished them all the necesary documents from bank and the shareholders too.

so this can be done but carries with it alot of risk too.