A pvt ltd co has received by cheque a sum of rs. 10 lacs towards share application money. It has not issued any shares. The amount received has been utilised in the subsidiary company located abroad. 1)Is there any time limit to issue shares? 2)Is there any violation in utilising the share application money?
07 January 2010
As is evident that the Company has accepted the Share Application Money you may do one simple thing. You may record the above transaction i.e. receipt of share application money and assurance given to proposed allottee in the board meeting minutes.
In other words simple noting of such receipt in the board minutes would be enough. No need to take any kind of approval from any concerned authorities.
Regarding time limit to convert such share application money into capital the law is silent. However as per practice allot share with 6 months of the receipt of application money.
Further collect the share application form from the proposed allottee for your record. You may download the sample share application from the link mentioned below:
12 January 2010
Thank you Mr.Ankur Garg. But with respect to my second question, I would like to know whether the share application money can be utilised for business without alloting shares?
12 January 2010
Thank you Mr.Ankur Garg. But with respect to my second question, I would like to know whether the share application money can be utilised for business without alloting shares?
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