26 April 2014
If A Private Company have Share Application Money Pending Allotment Then Its Treated As A deposit As Per Companies Act 2013 But Where We Disclose This Deposit in Current Liabilities or Unsecured Laon??????? Please Give Reference before Answering ........
26 April 2014
Under the new (revised) schedule VI, share application money pending allotment is to be shown as a separate line item under the head "Equity and Liabilities" on the face of the Balance Sheet and not under current liabilities or unsecured loan. Refer revised schedule VI Balance Sheet format as prescribed under it.
26 April 2014
PROVISIONS RELATED TO ALLOTMENT OF SHARES Companies are time bound to allot the shares within a period of sixty (60) days from the date of receiving application. If they fail to allot the shares within prescribed duration then the entire amount should be repaid by companies within 15 days to the respective applicants. Non repayment within prescribed duration would be considered as default & from the 76th day, the whole application money held by company will be treated as deposit. Further, application money received by the company for allotment of shares cannot be utilized for any other purpose & a separate bank account shall be maintained for receiving the application money from the applicant & all the transaction related to allotment shall be done through that account only. In the light of above mentioned provisions, our views are that all the companies shall repay the application money held as on 31/03/2014 before 30th May 2014.
26 April 2014
Dear Shubh, I think you're a bit misreading the provision of Co. Act 2013. Section 75,76 & 77 are related to public deposits but by very definition of a private co. u/s 2 (68), it can not accept any public deposit and therefore, the provisions contained in Chapter V (relating to acceptance of public deposits)are not applicable to a private co. and nor does any rule (Companies (Acceptance of Deposit) Rules 2014) made under those provisions of the Act. I think the provisions applicable in your case are contained in Part II of Chapter III (section 42)of the Act. But essentially, provisions contained under sec 42 are similar to what is there in sec 75,76 &77 with only exception that if allotment is not made within 60 days, application money is to be refunded within 15 days, failing which the application money does not become "Public Deposit". Coming to disclosure in financial statements, if the co. expect to allot shares within 60 days of receipt of application money, amount is to be disclosed as "Share application money pending allotment" but if the time limit of 60 days has already expired and refund is due under sec 42, then the same has to be shown under "Current liabilities". You are advised to visit Schedule II of Co. Act 2013 which clearly prescribe the above treatment. Just as you mentioned dates in your previous comment, I assume that you are preparing financial statement for FY 2013-14 and if so, would like to share one more thing. The above provisions of co. Act, whether Chapter V or III, are applicable w.e.f. 01.04.2014 and therefore no such provision should be a matter of consideration as far as FY 2013-14 is concerned. In Co. act 1956, there was no prescribed time limit and therefore the application money can reasonably be shown as "Share application money pending allotment". Hope this clarifies. Regards
CAclubindia
