Share Application Money
This query is : Resolved
31 August 2009
Hi Friends,
Can Share Application Money shown as such in a FY statement be converted into Loan from Shareholder in Next FY?
Can Share Application Money shown as such in a FY statement be converted into Loan from Shareholder in Next FY?
31 August 2009
I dont think so as they have to written it within a specific time period.
No
No
31 August 2009
I don't remember any provisions of Companies Act specifically barring to do so.
Dear Prakash please share your opinions on the same.
Dear Prakash please share your opinions on the same.
31 August 2009
Yes Agree with Kaustuv.
31 August 2009
Agree Shailesh that there is no restriction in law regarding such conversion.
But read the following:
INTER CORPORATE LOANS
Kindly appreciate, A public and private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.
A public and private company can also take loan from Banks/PFIs under the same section 372A as an inter corporate loan.
But if such company take loan from an individual the same would be considered as public deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
As per the definition of deposit given in Rule 2 of the said rules “deposit means any deposit of money with and include any amount borrowed by, a Company but does not include certain amounts.
There are certain amounts which are not considered as deposit as per the rules above and such amount includes inter corporate transaction hence amount taken by company/bank and PFI from other corporate are not considered as deposit.
On the other hand amount taken by public company from individual is not covered in the exemption given by the said rule, hence amount taken by public company from individual is considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
LOAN FROM INDIVIDUALS/OUTSIDERS
Kindly appreciate, A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.
But if a private company take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
Regards
But read the following:
INTER CORPORATE LOANS
Kindly appreciate, A public and private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.
A public and private company can also take loan from Banks/PFIs under the same section 372A as an inter corporate loan.
But if such company take loan from an individual the same would be considered as public deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
As per the definition of deposit given in Rule 2 of the said rules “deposit means any deposit of money with and include any amount borrowed by, a Company but does not include certain amounts.
There are certain amounts which are not considered as deposit as per the rules above and such amount includes inter corporate transaction hence amount taken by company/bank and PFI from other corporate are not considered as deposit.
On the other hand amount taken by public company from individual is not covered in the exemption given by the said rule, hence amount taken by public company from individual is considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
LOAN FROM INDIVIDUALS/OUTSIDERS
Kindly appreciate, A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.
But if a private company take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
Regards
17 September 2009
I thank all the Experts who made valuable contributions to my query :-)
Then, shall i conclude that there is no such restriction in a Pvt Ltd Company?
Then, shall i conclude that there is no such restriction in a Pvt Ltd Company?
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