Qery related to non payment of subscription amount

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 A Private Limited company is incorporated.There are three subscriber to MOA, out of which one is company holding more than 51% shares in the new company and there by becoming the holding Company of the newly incorporated.

The newly incorporated company has not open bank account....so no subscription money is deposited.It has been a year since the company is incorporated.Any solution that what steps should be taken for such type of Company

One more problem is that,in Balance Sheet of the holding Company...there is no entry of the investment made and no disclosure about the subsidary as the Company has not paid subscription money...

Also one more thing to note is that the holding and subsidary Company have same prefix, therefore a Board resolution and NOC is issued by the holding Company..

How will the unpaid subsriciptiom amount get reflected in holding Company

Ajay Mishra

Ajay Mishra (Expert)
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15 October 2013 Hi

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.

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)].

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 Thank you very much sir for the reply.

Now what solution is available.I mean what steps can be taken in respect of balance sheet of holding company and what shall be implication on the newly incorporated company which has fail to open bank account and deposit the subscription money in the same

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Ajay Mishra

Ajay Mishra (Expert)
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15 October 2013 First you confirm. who has paid pre incorporation expenses.

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 K.Sir

But can you give me rough idea that how it will affect, so that I can put up before the management

Ajay Mishra

Ajay Mishra (Expert)
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15 October 2013 You should read about the provision of priliminary expenses provisions.

Ajay Mishra

Ajay Mishra (Expert)
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15 October 2013 Before incorporation and commencement of business, company and the promoters of the company may incurred so many types of expenses like statuary fees and company logo designing, in some cases rent for the office premises during the time of incorporation not after incorporation etc... These are all comes under preliminary expenses .in simple words preliminary expenses are the expenses that spent by the promoters before the incorporation of company.
Examples:
Expenses paid for CA for incorporation of company
Expenses paid for name approve of the company
Expenses for printing of statutory documents like MOA, AOA
Stamp duties paid
Any other expenses paid to take the company into existence
Expenses for raising initial share capital

Ajay Mishra

Ajay Mishra (Expert)
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15 October 2013
Pre commencement expenses:

These are the expenses that are incurred by the company after incorporation and before commencement of business. For example a private company and a public ltd company without share capital can commence business after getting certificate of incorporation from ROC. But a public company having share capital is not allowed to commencement of business until it get certificate if commencement of business. In this mean time they can inure some expenses like recruiting employees etc… these expenses are called as pre commencement expense. The company will written off this expenses in that year only

For more, go to the following link:
http://accountantsquare.blogspot.in/2012/05/what-are-preliminary-expenses-and.html

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Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 Thank you very much Sir for all the replies and guidance.i shall refer the section and link and get back to you for any more query