About Share Application Money

This query is : Resolved

Anwar Shaikh (Querist)
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29 September 2009 Hi

Suppose if a private limited company has it’s authorized capital of Rs.100000
And also paid capital of Rs.100000/-. In this case amount brought in or withdrawn from business by directors (shareholders) we generally show as SHARE APPLICATION MONEY.

My Question / doubt :

1) Can we show it like Share application money, or is there is any other better way ?

2) If authorized & paid up capital is Rs.100000/- , can share application money be Rs.50 Lacs ?

3) Is there is any condition under companies act that share application money should be converted in to paid capital only, and can not be reduced or withdrawn by the directors (shareholders)

Guest

Guest (Expert)

29 September 2009 (1) It can't be shown as the Share application money. You should show it as the short term deposit

(2) Yes, share application money can be over authorised share capital

(3) Share application money can not be reduced, it is only refunded. But this option will put your company in the scrutiny one day.