Please help me with the following: Our Company, a Private limited Company has Share application money pending before the Commencement of the Companies Act, 2013. According to Section-42 of the Companies Act, 2013 Company is required to allot shares within 60 Days from the date of receipt of Share Application Money. If the Company is unable to allot the shares with in time it shall repay the application money within 15 Days.
Now our query is:
1) Whether Section 42 is applicable on the Share Application Money received by our Company before the Commencement of the Companies Act, 2013? If it is so, then from when the 60 Days criteria shall be taken into Consideration (From the Commencement of the Act, i.e. 01.04.2014 or any other date)??
Now, According to Section- 73-76(Chapter V) of the Companies Act, 2013 and as per the Rules notified by the MCA under this Chapter, if the Company fails to allot shares and also fails to refund the share application money with in time prescribed then such money shall be treated as deposits
Now our Second query is:
1)If Section 42 is applicable and Company fails to allot the shares or refund the money, whether such share application money due for allotment shall be treated as Deposits? If Yes, from which date it shall be treated as Deposits?
2)Financially, If the Company is not in a position to refund the same even till the end of the Financial year and want to retain the same for a longer period then what step should be taken into consideration to retain the same?
04 June 2014
I believe it should be considered as deposits. You may please refer Section 74 of the 2013 Act read with Rule 19 and 20 of Companies (Acceptance of Deposits) Rules, 2014 for the process.
This is my interpretation. Could be wrong as I am not a Company law guy.
With regard to second question, I believe you get upto 1 year to repay and nothing beyond that.
CAclubindia
