Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Allotment of shares

Raja. (company secretary) (71 Points)

13 June 2014

1. Presently, a Pvt. Company has ‘Share Application Money’ (which is pending for allotment since last 1 year). Will there be any legal hassle in continuing the same till end of current financial year?

2. The above Pvt. Company intends to invite further ‘Share Application Money’ from 20 individuals. As per Companies Act, 2013, it has to follow provisions of Sec. 62 (further issue of share capital) as well as of Sec. 42 (private placement). Would appreciate, if anybody can share ‘Checklist’ for the detailed procedure to be followed by the Company for issue and allotment of shares.

Reply
Follow
Share

2 Replies

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 16 June 2014

Hi Raja, To answer your first question, After the commencement of CA 2013, section 42 states that any share application money received should be utilised (i.e. shares to be alloted) within 60 days of receipt.....if not then it should be refunded within 15 days......if not refunded within that period, then interest to be paid... SEcondly the deposits rules further state that such money will be treated as deposits if not refunded within the time period.....Then you ll have to comply with another set of procedures..... So share application money standing in accounts as on 1/4/14 should have been allotted within end of May 14 or refunded within 15 days...