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Effective capital calculation

pragadeeshkanna (searching) (281 Points)

04 September 2012

Dear frnds,

For the purpose calculating effective capital, we have to deduct investments. Should that investment include investments in the form of share application money? kindly clarify

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2 Replies

CS. DISHA SHAH (Properitor of D. M. SHAH & CO. COMPANY SECRETARY) (394 Points)
Replied 14 September 2012

Hello,

For the calculation of Effective Capital,

Share Application Money should be deduct from the paid up capital after that all other things are added/decuted . you pls. check the format.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 14 September 2012

Effective Capital means the aggregate of the paid up share capital (excluding share application money or advances against shares), if any, for the time being standing to the credit of share premium account, reserves and surplus (excluding revaluation reserve), long term loans and deposits repayable after one year (excluding working capital loans, overdraft, interest due on loands unless funded, bank guarantee, etc., and other short term arrangements) as reduced by the aggregate of any investments(except in the case of investment by an investment company whose principal business is acquisition of shares, stock debentures or other securities), accumulated losses and preliminary expenses not written off.

Where the appointment of the mangerial person is made in the year in which company has been incorporated, the effective capital shall be calculated as on the date of such appointment, in any other case, the effective capital shall be calculated as on the last date of the financial year preceding the financial year in which the appointment of the managerial person is made.