Subscribed shares

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 Dear Experts,

In a private Company Mr. X had subscribed n number of shares during the time of Incorporation,

Mr. X has still not paid money for the shares subscribed b him. the Company was incorporated a year ago.
In the balance sheet the auditors are sowing the amount unpaid by Mr X as unpaid amount on the call made.

In this case what should be done keeping in mind the Companies Act, 1956. Is there any violation?

Please Help.

Thankyou.

Ajay Mishra

Ajay Mishra (Expert)
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28 September 2013 Hi

In accordance with the provisions of section 36(2) of the Companies Act, 1956, all money payable by any member to the company under the MOA or AOA shall be debt due from him to the company. Further, a subscriber to the memorandum must pay for his shares in cash even if the promoters have promised him the shares for services rendered in connection with the promotion of the company.

A subscriber to memorandum cannot, after issue of certificate of registration, repudiate his subscription on ground that he was induced to sign by misrepresentation of an agent of company. [Metal Constituents Ltd., In re (1902) 1 Ch. 707].

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 The Subscriber to the Memorandum does not have any problem in paying.

While preparing the Balance Sheet as on 31st 2013, the amount is being showed as call unpaid by the director. Is this contravening any provisions of Companies Act, 1956.

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Ajay Mishra

Ajay Mishra (Expert)
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28 September 2013 It can not be treated as call money, because you have not issued capital. The shareholders is deemed to be subscribed fully paid up capital, so it will not be treated as call money pending.

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 Thankyou, Then how should we write it in the Balance Sheet.