08 April 2009
Hi can anyone help with the following:
Company A deposits with Company B(of which A is a promoter) share application money in 2001. no shares have been issued in respect of share application money till 2009. B wants to return Share application money to A with interest on amount.
Courts have held that long term deposits of Share Application Money should be treated as inter corporate loans. question arises -what then is treatment of share application money in the instant case?
further issues:
case laws stating share application money as loans?
case law/commentary which spell out who can give a loan and to whom?
08 April 2009
As per companies act once you receive share application money the same has to be alloted or returned to the applicant within 120 days. If not done it is a clear violation of companies act.
From 2001 to 2009 how the same has been carried out in your balance sheets and what is the qualification made by your auditors and reply made by your directors. You have to collect those details and based on that now you have to take decission.
Court decission is based on the facts of the each case and you should not generalise it.
CAclubindia
