is minimum subscripttion and the appilication money are one and the same?
15 Replies
CS Jithesh (ACS,)
(COMPANY SECRETARY )
(485 Points)
Replied 30 April 2010
No minimum subscripttion is the minimum shares to be subscribed to make a share issue sucess. Normally it is 90% of the issued shares which meant for subsription. Application money is the total amount of money which you a company receives by applying for shares for subscripttion by investors or general public.
Application money can be full , partial .
hope this is cleared
regards
CS Jithesh
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 30 April 2010
Agree with the learned member.
In a private company the term Minimum Subscripttion has no role to play. This term is connected with Public offer.
In case your 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.
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:
/share_files/files_display.asp?files_id=11908
Practically use of this money depends on the terms of subscriptttion 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.
Regards
Ashish Sharma
(Service)
(1028 Points)
Replied 30 April 2010
Dear Sir,
Is it is necessary to make an subscriptttion agreement between the prospective investor and the issuer company in private limited. And if in case no agreement can application money in private company used for daily purpose.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 30 April 2010
As per my experience it is better to have a subscripttion agreement to avoid future disputes. However legally it is not required by law.
Regards
Neeta
(Finance)
(345 Points)
Replied 30 April 2010
Minimum Subscripttion , as said by the learned member , is 90% of the issue. ( eg , if u make issue for 1000 shares , to make the issue , u must get atleast (ie, minimum subscripttion ) application for subscribing to 900 shares. )
And application money is the figure u ask for on the share at the time of applying for the shares. Means u can ask for Rs. 2 or 3 or even 10 for Rs.10/per share.
Hops clear, and as regards the agreement , in my view there isn't any necessity to have any agreement with prospective investors. also der isn't any specification on the utilization of share application money, coz the prospectus provides the clause of refund in case of non- allotment but this is the case of public company.
As regards a pvt co , u can utilise and it isn't traceble from the journal entries even.
other views !!!
CS Jithesh (ACS,)
(COMPANY SECRETARY )
(485 Points)
Replied 30 April 2010
You are right, even there are pvt companies which accepts unsecured loans from directors who are shareholes of the company and will show in the balance sheet as Share Application Money. As far as my knowledge there is no provisions which restricts the usage of share application money in case odf pvt companies. Having said that it always good governance to refund the same ASAP.
Regards
CS Jithesh
CS Jithesh (ACS,)
(COMPANY SECRETARY )
(485 Points)
Replied 30 April 2010
But once the shareholders has given their unanimous decision for the use of Share application , then it is ok right. And kindly tell me where is in the Companies act mentioning that teh Share application cannot be used. Its for the listed companies that teh share application cannot be used for any other purpose.
For a pvt company I think once the shareholders are agreeeing then i think there is no issue. Because I have mentioned only in case of Pvt Companies.
sairam
(student)
(118 Points)
Replied 30 April 2010
no dear application money and minimum subscripttion is entirely different
Pradip Narsingani
(Income Tax & GST Consultant/ CA-Final)
(572 Points)
Replied 30 April 2010
Minimum Subscriptttion , as said by the learned member , is 90% of the issue. ( eg , if u make issue for 1000 shares , to make the issue , u must get atleast (ie, minimum subscriptttion ) application for subscribing to 900 shares. )
And application money is the figure u ask for on the share at the time of applying for the shares. Means u can ask for Rs. 2 or 3 or even 10 for Rs.10/per share.
Hops clear, and as regards the agreement , in my view there isn't any necessity to have any agreement with prospective investors. also der isn't any specification on the utilization of share application money, coz the prospectus provides the clause of refund in case of non- allotment but this is the case of public company.
As regards a pvt co , u can utilise and it isn't traceble from the journal entries even.
other views !!!
Hemant
(Student)
(243 Points)
Replied 30 April 2010
Application money is the amount payable on applicatoin for making an offer to subscribe to the shares of a company.
Minimum subscripttion is the susbcription which a company must recieve in order to make a regular or valid allotment of shares. As per SEBI guidelines a company making public or right issue must receive at alreast 90% of the issue before making allotment.
First relates to money ( i.e for insstance Rs. 5 per share applied as application money for applying a share) and latter relates to absolute number of shares ( for instance if a company intends to issue 100 shares to public then for it 90 shares consititutes the minimum subscripttion)
CMA Hemant Joshi I Cost Analyst
vikash rathi
(Chartered Accountant)
(787 Points)
Replied 30 April 2010
| Originally posted by : CS Jithesh (ACS, CWA Inter) | ||
 |
No minimum subscriptttion is the minimum shares to be subscribed to make a share issue sucess. Normally it is 90% of the issued shares which meant for subsription. Application money is the total amount of money which you a company receives by applying for shares for subscriptttion by investors or general public. Application money can be full , partial . hope this is cleared regards CS Jithesh |
 |
totally agree with it......
(Guest)
According to the Companies Act Minimum subscripttion is the subscripttion that in the opinion of the directors is required to be subscribed by the public in order to start with the business or to commence the business.
and according to the SEBI guidelines it is the 90% of the total capital issued or offered by the company to the public.
priyanka bathwal
(student)
(160 Points)
Replied 01 May 2010
No
Minimum subscripttion is the amount of issued share capital which is required to be subscribed for making allotment by a company.
It is 90% of the issued share capital
There are days limit too.
And
Application money is the money received on application
It can be more, less or equal to the issued share capital
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