Minimum paid up capital of the private limited company

This query is : Resolved

K. C. SUTHAR (Querist)
Follow

14 July 2009 Dear Sir,
A, pvt ltd company was incorporated on 9th oct 2008 with two promoters, one of them was foreigner, However the Indian promoters has paid his part of the subscription, but the foreigner has not yet paid as on date. Now the company wants to prepare the accounts up to march 2009, in which the paid up capital would be only 50,000/-. but as per the act minimum paid up capital should be Rs. 1.00 lacs.
My quary is : 1.How to show this balance amount of Rs. 50.000/- as paid. (otherwise company will not be able to file the accounts)
2. Can any other person pay the amount on behalf of the foreigner in cash so comapny can credit the same before March-09.
3. the foreigner has already sent some of Rs. 50,000/- before incorporation through proper chennal for some other purpose in relation to same business, can we use this fund as his subscription.

CA. Naveen Gahlot

CA. Naveen Gahlot (Expert)
Follow

14 July 2009 instead of debiting bank you can debit the promoter and credit share capital account. hence he will be shown as a debtor and our capital will be 100000/-

Guest

Guest (Expert)

30 June 2011 Hello
K C Suthar can I have your mail ID please. R P Karal

Upgrade to CAclubindia Pro. Subscribe Now!

K. C. SUTHAR

K. C. SUTHAR (Querist)
Follow

01 July 2011 my email id is sutharkc@gmail.com
my contact no is 022-24376781, 022-66602084

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

03 August 2024 Here’s how to handle the situation regarding the minimum paid-up capital requirements for a private limited company:

### 1. **Showing Paid-Up Capital in Accounts**

**Issue:** The company’s paid-up capital is less than the minimum required capital.

**Solution:**
- **Subscription Amounts:** The accounts should reflect the actual paid-up capital as of the balance sheet date. If the foreign promoter has not paid, the paid-up capital will be shown as ₹50,000/- in the accounts.
- **Disclosure:** In the notes to the accounts, you should disclose the non-payment of the foreign promoter’s subscription. Mention the amount subscribed but not paid and any reasons for the non-payment.

### 2. **Alternative Payment for the Foreign Promoter’s Subscription**

**Can another person pay the amount on behalf of the foreigner?**

- **Legal Compliance:** The subscription amount should be paid by the person who has subscribed to the shares. Another person cannot pay the amount on behalf of the foreign subscriber due to legal and regulatory requirements.
- **Company’s Capital Structure:** Ensure that any payment towards shares is made by the actual subscriber as per the Memorandum of Association (MOA) and the Articles of Association (AOA). This maintains the integrity of the company’s capital structure and avoids legal complications.

### 3. **Using Pre-incorporation Funds as Subscription**

**Can funds sent by the foreign promoter before incorporation be used?**

- **Proper Channel:** The funds sent by the foreign promoter before incorporation for business purposes cannot be used directly as capital subscription. The amount should be properly accounted for as capital once the company is incorporated.
- **Subscription Process:** The foreign promoter must formally subscribe to the shares and make the payment as per the requirements. This subscription must be recorded in the company’s records and reported to regulatory authorities.

### Practical Steps to Address the Situation:

1. **Update Subscription Details:**
- **Foreign Promoter's Subscription:** Ensure the foreign promoter formally pays their subscription amount. If payment is pending, it should be followed up urgently to meet statutory requirements.

2. **Consult with Professionals:**
- **Legal and Accounting Advice:** Consult with a company secretary or legal professional to ensure compliance with the Companies Act and other regulations.
- **Filing Compliance:** If the company cannot meet the minimum capital requirement, it may face challenges in filing accounts. Seek professional advice on how to proceed with compliance or whether a variation in capital structure is necessary.

3. **Communicate with Authorities:**
- **Regulatory Filing:** If the company is unable to meet the minimum paid-up capital requirement by the due date, communicate with the relevant authorities and file for any necessary extensions or exemptions.

4. **Record Keeping:**
- **Document Transactions:** Maintain clear records of all transactions, communications with promoters, and attempts to comply with regulatory requirements.

### Summary

To meet the minimum paid-up capital requirements, the foreign promoter should complete their subscription payment as per the legal requirements. Alternative payments or pre-incorporation funds cannot be used in place of the foreign promoter’s subscription. It is crucial to ensure that all subscription payments are made in accordance with statutory requirements to avoid legal issues and compliance problems.