Share application money

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Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 Can I use share application money for the purchase of the land without alloting shares to the applicant.? under which section of companies act or any other law it prohibits me...

RG - A Helping Hand

RG - A Helping Hand (Expert)
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01 December 2011 There is no provision in company law which regulates the receipt and use of share application money. However if you have any agreement with the investor plz check the same.

Ideally you can use the money for company business if there is no specific restriction.

Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 That means there is no voilation of any provision of law under any act..

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Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 That means there is no voilation of any provision of law under any act..

RG - A Helping Hand

RG - A Helping Hand (Expert)
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01 December 2011 According to me NO

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Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 can u tel me any provision related to dis.??

Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 can u tel me any provision related to dis.??

RG - A Helping Hand

RG - A Helping Hand (Expert)
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01 December 2011 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:

https://www.caclubindia.com/share_files/files_display.asp?files_id=11908

Regards

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RG - A Helping Hand

RG - A Helping Hand (Expert)
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01 December 2011 On the practical front this money is very much available to the company as nobody can trace this money. Reason being there is no such requirement to open some escrow account for the same application money.

Practically use of this money depends on the terms of subscripttion agreement between the prospective investor and Issuer Company.

Regarding time limit to convert such share application money into capital the law is silent. However as per practice (specifically mention/mandatory requirement in FEMA regarding foreign money) allot share with 6 months of the receipt of application money.

Further there is no need to maintain share application money in a separate account.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2011 thank you...

RG - A Helping Hand

RG - A Helping Hand (Expert)
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02 December 2011 You are always welcome friend. Plz keep sharing your queries.

RG

Querist : Anonymous

Querist : Anonymous (Querist)

08 December 2011 HOW THE CHARGE CAN BE CREATED ON GOODWILL??

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