Allotmtent of shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 September 2013 Dear Experts,

A Private Company had received share application money last year. The Company has not yet allotted the shares.

Is there any Non- Compliance on the part of the company?

Ankur Garg

Ankur Garg (Expert)
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15 September 2013 There was a very important amendment in Corporate Laws through MCA Notification dated December 14, 2011. Ministry of Corporate Affairs has vide its notification dated 14.12.2011, amended the Unlisted Public Companies (Preferential Allotment) Rules, 2003. There are quite a few changes in the above rules regarding share application money through the above said notification.

You may download the said notification from the link given below:

https://www.caclubindia.com/forum/major-amendment-regarding-share-application-money-180694.asp

Thanks

Ankur Garg

Ankur Garg (Expert)
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15 September 2013 It seems there is a non compliance in your case. Please go through the provisions given below:

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 subscription 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.

Thanks

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Querist : Anonymous

Querist : Anonymous (Querist)

15 September 2013 Thankyou for a prompt reply.

But will the above mentioned rules be applicable on a private company??