Issue of share certificate
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 December 2013
Date of Incorporation of Company- 16.03.2012
Authorised, issued n subscribed capital as on 31.03.2013 is 500000.00
BM issue of shares to subscribers 15.04.2012
Money received from subscribers is as follows
Particulars Receiving date
Subscriber 1 28.05.2012
Subscriber 2 08.06.2012
Bank Account opening date is 05.05.2012
my querry is whether subscribers to MOA can be allotted shares on 15.04.2012 ie before receiving the share money from them.. is it possible? or it has to be done only after receipt of share amount? wud this lead to contravention of section 3(1)(iii) of Companies act, 1956
and what are the implications for issuance of share certificate?
Authorised, issued n subscribed capital as on 31.03.2013 is 500000.00
BM issue of shares to subscribers 15.04.2012
Money received from subscribers is as follows
Particulars Receiving date
Subscriber 1 28.05.2012
Subscriber 2 08.06.2012
Bank Account opening date is 05.05.2012
my querry is whether subscribers to MOA can be allotted shares on 15.04.2012 ie before receiving the share money from them.. is it possible? or it has to be done only after receipt of share amount? wud this lead to contravention of section 3(1)(iii) of Companies act, 1956
and what are the implications for issuance of share certificate?
12 December 2013
Provisions of section 12(1) of the Companies Act, 1956 are relevant in this situation, which provides that in order to form a public company limited by shares at least seven persons and in case of a private company limited by shares at least two persons have to subscribe their names to Memorandum of Association. Following conditions in that matter shall be ensured by the subscribers:—
(i) No subscriber of the Memorandum of a company having a share capital shall take less than one share, [Section 13(4)(b)] and
(ii) Each subscriber of the Memorandum shall write opposite to his name, the number of shares he takes. [Section 13(4)(c)]
Subscribers can be either literate or illiterate, man or woman, either resident or non-resident, either Indian national or foreign national, etc. A company being an artificial legal person can also be a subscriber.
Even though the signature of a subscriber to memorandum of association of a company is not properly attested, once the memorandum has been registered, such subscriber cannot divest himself of his liability.
A subscriber to memorandum cannot, after issue of certificate of registration, repudiate his subscription on ground that he was induced to sign by misrepresentation of an agent of company. [Metal Constituents Ltd., In re (1902) 1 Ch. 707].
If subscribers to memorandum have any objection to memorandum and articles of association, the time to object is before putting their signatures to it. [East Bengal Sugar Mills Ltd., In re (1941) 11 Comp Cas 169 (Cal)].
In accordance with the provisions of section 36(2) of the Companies Act, 1956, all money payable by any member to the company under the MOA or AOA shall be debt due from him to the company. Further, a subscriber to the memorandum must pay for his shares in cash even if the promoters have promised him the shares for services rendered in connection with the promotion of the company.
Provisions of section 12(1) of the Companies Act, 1956 are relevant in this situation, which provides that in order to form a public company limited by shares at least seven persons and in case of a private company limited by shares at least two persons have to subscribe their names to Memorandum of Association. Following conditions in that matter shall be ensured by the subscribers:—
(i) No subscriber of the Memorandum of a company having a share capital shall take less than one share, [Section 13(4)(b)] and
(ii) Each subscriber of the Memorandum shall write opposite to his name, the number of shares he takes. [Section 13(4)(c)]
Subscribers can be either literate or illiterate, man or woman, either resident or non-resident, either Indian national or foreign national, etc. A company being an artificial legal person can also be a subscriber.
Even though the signature of a subscriber to memorandum of association of a company is not properly attested, once the memorandum has been registered, such subscriber cannot divest himself of his liability.
A subscriber to memorandum cannot, after issue of certificate of registration, repudiate his subscription on ground that he was induced to sign by misrepresentation of an agent of company. [Metal Constituents Ltd., In re (1902) 1 Ch. 707].
If subscribers to memorandum have any objection to memorandum and articles of association, the time to object is before putting their signatures to it. [East Bengal Sugar Mills Ltd., In re (1941) 11 Comp Cas 169 (Cal)].
In accordance with the provisions of section 36(2) of the Companies Act, 1956, all money payable by any member to the company under the MOA or AOA shall be debt due from him to the company. Further, a subscriber to the memorandum must pay for his shares in cash even if the promoters have promised him the shares for services rendered in connection with the promotion of the company.
12 December 2013
Issue of shares to the subscriber on the date of incorporation of the company.
But yes, date of issue of share certificate can be date of first Board meeting or there after. But it is not mandatory that subscribed money should be received to the company before issue of share certificate.
But yes, date of issue of share certificate can be date of first Board meeting or there after. But it is not mandatory that subscribed money should be received to the company before issue of share certificate.
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 December 2013
can u please clarify that wil section 3(1)(iii) wud be attracted here?
on what date should i pass a resolution for issue of shares to subscribers?
on what date should i pass a resolution for issue of shares to subscribers?
12 December 2013
Yes, you will pass a resolution for issue of share certificate to subscriber.
12 December 2013
AUTHORITY FOR ISSUANCE OF SHARES TO THE SUBSCRIBERS TO THE MEMORANDUM S OF ASSOCIATION OF THE COMPANY.
The Chairman informed the Board that the Company has received the subscription amount as stated in the subscription clause of the Memorandum and Article of Association for issuance of 15,000 equity shares of Rs. 10 each for Rs. 1,50,000 only from the subscribers to the Memorandum & Article of the Company. The Board considered and passed the following resolution unanimously.
“RESOLVED THAT the subscribers to the Memorandum of Association be issued 15,000 Equity of Rs. 10 each which they have agreed to take as per details below:-
S. No. Name of the Shareholder Address No of Shares Dist. No. of Shares From- To Folio No. Certificate No. Amount (Rs.)
FURTHER RESOLVED THAT the equity shares certificate of the company in respect of such shares be issued to the aforesaid subscribers under the common seal of the company and the same be signed by any two directors of the Company and one authorized signatory of the Company.
FURTHER RESOLVED THAT the name of the above subscribers be entered into the Register of Members of the Company.”
AUTHORITY FOR ISSUANCE OF SHARES TO THE SUBSCRIBERS TO THE MEMORANDUM S OF ASSOCIATION OF THE COMPANY.
The Chairman informed the Board that the Company has received the subscription amount as stated in the subscription clause of the Memorandum and Article of Association for issuance of 15,000 equity shares of Rs. 10 each for Rs. 1,50,000 only from the subscribers to the Memorandum & Article of the Company. The Board considered and passed the following resolution unanimously.
“RESOLVED THAT the subscribers to the Memorandum of Association be issued 15,000 Equity of Rs. 10 each which they have agreed to take as per details below:-
S. No. Name of the Shareholder Address No of Shares Dist. No. of Shares From- To Folio No. Certificate No. Amount (Rs.)
FURTHER RESOLVED THAT the equity shares certificate of the company in respect of such shares be issued to the aforesaid subscribers under the common seal of the company and the same be signed by any two directors of the Company and one authorized signatory of the Company.
FURTHER RESOLVED THAT the name of the above subscribers be entered into the Register of Members of the Company.”
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 December 2013
is there a requirement that company should have minimum Rs. 1lac of paid up capital at time of incorporation?
12 December 2013
Requirements of minimum paid-up capital
Every private company requires minimum paid up capital of Rs. 1 lakh and public company requires minimum paid up capital of Rs. 5 lakhs. Now new company cannot be registered which is having less than the minimum paid-up capital required
However, as per section 3(6) no criteria for minimum paid up capital is applicable for the Companies registered under the provisions of section 25 of the Act. It is not stated in this provision when the new companies should issue the minimum shares after incorporation and make them paid-up to the extent required under the law. However the promoters shall undertake to subscribe in the Memorandum and Articles, the minimum amount of capital as required and should allot the same at the first Board meeting of the company.
Requirements of minimum paid-up capital
Every private company requires minimum paid up capital of Rs. 1 lakh and public company requires minimum paid up capital of Rs. 5 lakhs. Now new company cannot be registered which is having less than the minimum paid-up capital required
However, as per section 3(6) no criteria for minimum paid up capital is applicable for the Companies registered under the provisions of section 25 of the Act. It is not stated in this provision when the new companies should issue the minimum shares after incorporation and make them paid-up to the extent required under the law. However the promoters shall undertake to subscribe in the Memorandum and Articles, the minimum amount of capital as required and should allot the same at the first Board meeting of the company.
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 December 2013
can u please support your statement that share money from subscribers can be received after allotment of shares to them.. with section of companies act
12 December 2013
read section 36(2) of the Companies Act, 1956.
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 December 2013
Sir in my case the subscribers to moa have paid the money for shares after the bank account has been opened by cheque. Now can company allot the subscribers shares before receiving the money? and is there any requirement in the Companies act that at the time of incorporation there should be a minimum capital of rupees 1Lac?
02 August 2024
To address your queries about issuing share certificates, here’s a detailed explanation based on the Companies Act, 1956 and the Companies Act, 2013:
### 1. **Allotment of Shares Before Receipt of Share Money**
Under the Companies Act, 1956 and the Companies Act, 2013, shares should generally be allotted only after the receipt of the share application money. Here’s a detailed breakdown:
- **Companies Act, 1956:**
- **Section 3(1)(iii):** This section specifies that a company can only commence its business once it has received the minimum subscription, which is 90% of the amount mentioned in the prospectus or in the case of a private company, the amount as agreed by the subscribers.
- **Implication:** Allotting shares before receiving the money can lead to a contravention of this provision as the company must receive the subscription amount before the shares are allotted to ensure compliance with the minimum subscription requirement.
- **Companies Act, 2013:**
- **Section 39(1):** Shares cannot be allotted unless the amount due on application for those shares has been paid to the company. This implies that money must be received before the allotment of shares.
**Implications for Issuance of Share Certificates:**
- Share certificates should only be issued once the shares have been allotted, and the money for those shares has been received. Issuing share certificates before receiving payment would be contrary to the requirements of the Companies Act and can lead to legal issues.
### 2. **Date of Allotment and Resolution**
- **Resolution Date:**
- A resolution for the allotment of shares should be passed on or after the receipt of the share application money. This ensures compliance with the legal requirement that shares should not be allotted before the payment is received.
### 3. **Minimum Capital Requirement at Incorporation**
- **Companies Act, 1956:**
- **Section 3(1)(iii):** The minimum paid-up capital required for a private company at the time of incorporation was Rs. 1 lakh.
- **Companies Act, 2013:**
- The minimum paid-up capital requirement for a private company was removed under the Companies Act, 2013. There is no longer a mandatory minimum capital requirement at the time of incorporation for private companies.
### 4. **Supporting Statements**
- **Companies Act, 2013:**
- **Section 39(1):** Confirms that shares can only be allotted after receipt of the full subscription amount. This aligns with the principle that shares should be allotted only after receiving payment.
**Summary:**
1. **Allotment of Shares:** Shares should not be allotted before receiving the payment from subscribers. This ensures compliance with the requirement that shares must be paid for before allotment.
2. **Share Certificates:** Can only be issued after shares have been allotted and payment has been received.
3. **Resolution for Allotment:** Should be passed only after the receipt of share application money.
4. **Minimum Capital Requirement:** Under the Companies Act, 2013, there is no minimum capital requirement for private companies at the time of incorporation.
The procedure followed should be in line with the legal requirements to avoid any contravention and potential legal issues.
### 1. **Allotment of Shares Before Receipt of Share Money**
Under the Companies Act, 1956 and the Companies Act, 2013, shares should generally be allotted only after the receipt of the share application money. Here’s a detailed breakdown:
- **Companies Act, 1956:**
- **Section 3(1)(iii):** This section specifies that a company can only commence its business once it has received the minimum subscription, which is 90% of the amount mentioned in the prospectus or in the case of a private company, the amount as agreed by the subscribers.
- **Implication:** Allotting shares before receiving the money can lead to a contravention of this provision as the company must receive the subscription amount before the shares are allotted to ensure compliance with the minimum subscription requirement.
- **Companies Act, 2013:**
- **Section 39(1):** Shares cannot be allotted unless the amount due on application for those shares has been paid to the company. This implies that money must be received before the allotment of shares.
**Implications for Issuance of Share Certificates:**
- Share certificates should only be issued once the shares have been allotted, and the money for those shares has been received. Issuing share certificates before receiving payment would be contrary to the requirements of the Companies Act and can lead to legal issues.
### 2. **Date of Allotment and Resolution**
- **Resolution Date:**
- A resolution for the allotment of shares should be passed on or after the receipt of the share application money. This ensures compliance with the legal requirement that shares should not be allotted before the payment is received.
### 3. **Minimum Capital Requirement at Incorporation**
- **Companies Act, 1956:**
- **Section 3(1)(iii):** The minimum paid-up capital required for a private company at the time of incorporation was Rs. 1 lakh.
- **Companies Act, 2013:**
- The minimum paid-up capital requirement for a private company was removed under the Companies Act, 2013. There is no longer a mandatory minimum capital requirement at the time of incorporation for private companies.
### 4. **Supporting Statements**
- **Companies Act, 2013:**
- **Section 39(1):** Confirms that shares can only be allotted after receipt of the full subscription amount. This aligns with the principle that shares should be allotted only after receiving payment.
**Summary:**
1. **Allotment of Shares:** Shares should not be allotted before receiving the payment from subscribers. This ensures compliance with the requirement that shares must be paid for before allotment.
2. **Share Certificates:** Can only be issued after shares have been allotted and payment has been received.
3. **Resolution for Allotment:** Should be passed only after the receipt of share application money.
4. **Minimum Capital Requirement:** Under the Companies Act, 2013, there is no minimum capital requirement for private companies at the time of incorporation.
The procedure followed should be in line with the legal requirements to avoid any contravention and potential legal issues.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on capital gains revoked us 54f
- Should I include march foreign salary received in April in my income for FY 2023-24?
- Inventory of finished goods
- Sale of property furniture sale
- Filing of Form 10BB instead of Filing Form 10B
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Confusion around Form 26QB fields
- Applicability of Ind As to associate of associate
- Refund of AY 22-23
- Disallowance of Section 43B(h) to sez units
- Last year input claim shown in gstr9
- GST Registration Cancellation books of accounts asked by officer
- TDS Deduction Online Learing Platform
- Point (III) 9 of GSTR-9C
- As per our records, find the below outstanding demand(s)* and interest payable u/s 220(2):
- Regarding transaction th. credit card
- HSN Details in IFF/GSTR-1 & in GSTR 9
- MIS MATCH OF INVOICE NUMBER
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
