Allotement of share

This query is : Resolved

SHREYANSH B SHAH (Querist)
Follow

03 April 2014 Hi Expert

I have formed Pvt Ltd company for One of My Client in Dec 2013 with Issued capital of Rs . 27,00,000 , now one of director who has subscribe 50% share , is in Liquidity crunch and wishing for payment in August 2014,

I want to know whether there is any limit for making payment for share which is allotted during the company Formation.

Hoping your support as in every query in past

Thank you

SHAKTI JINDAL

SHAKTI JINDAL (Expert)
Follow

09 April 2014 Dear, it is not clear as to what do you mean by "making payment for share"? I presume, these are equity shares and they cannot be redeemed. The only recourse would be that the shareholder can sell these shares for a consideration and for transfer of shares, there is no time limit. It can be done during the year of company's formation as well.

SHREYANSH B SHAH

SHREYANSH B SHAH (Querist)
Follow

09 April 2014 I am asking that company formed in DEC but still director had not made payment of allotted share
So whether there is any limit on payment of Subscribed share by Director during formation of company

Upgrade to CAclubindia Pro. Subscribe Now!

SHAKTI JINDAL

SHAKTI JINDAL (Expert)
Follow

09 April 2014 Please refer Section 11, which provides as follows:-

11. (1) A company having a share capital shall not commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration; and
(b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.
(2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty which may extend to five thousand rupees and every officer who is in default shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.
(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.

This indicates time limit of 180 days.