DR GAURAV GUPTA FCA, FCS, LL.B (COMPANY SECRETARY) (1046 Points)
22 March 2009HI
SHOULD THE SUBSCRIBER OF THE NEWLY INCORPORATED COMPANY MUST PAY THEIR SUBSCRIBED AMOUNT IMMEDIATELY AFTER INCORPORATION OR THEY CAN PAY IT LATER? ADVISE
CS Ekta
(Company Secretary)
(309 Points)
Replied 23 March 2009
Someone please give answer to this query
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 23 March 2009
There is no specific provision in the Co. act for the same. Ideally such amount should be deposited by the subscribers after incorporation of the co. in the newly opened bank a/c of the company and record the same in the first BM Minutes.
Alternatively, as there is no tracing of such amount, it may be deposited by them later. As a CS i would suggested you should opt I opotion to avoid any kind of future problem.
CS Ekta
(Company Secretary)
(309 Points)
Replied 24 March 2009
What needs to be done in case any of the subscriber do not want to take the shares subscribed by him?
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 24 March 2009
Dear Ekta, Kindly appreciate after incorporation of the company withdrawal by subscriber to take their subscribed shares is not possible. As per me the only way out is after taking their subscribed shares they may transfer the shares to somebody else.
Further views solicited...
CS Ekta
(Company Secretary)
(309 Points)
Replied 25 March 2009
Can we forfeit the shares not taken by subscribers?
Sumit Jain
(CA)
(4760 Points)
Replied 25 March 2009
Sumit Jain
(CA)
(4760 Points)
Replied 25 March 2009
a subscriber cannot refuse to take shares for which he/she had given his/her decleration to take the shares
if any of the subcriber donot want to take take shares then he can transfer those shares after subscribing
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 25 March 2009
Dear Ekta & Sumit,
Answer is partly wrong. Subscribers of MOA are deemed shareholders of the company. They don't need to take shares. As soon as they subscribe the MOA & file it with ROC along with other incorp. doc they become the members of the company.
However shares subscribed by them can not be forfeited as there is no issue of non payment of call etc. but they may be transfer later.
Regards-Ankur
Sumit Jain
(CA)
(4760 Points)
Replied 25 March 2009
dear ankur
Subscribers of MOA are deemed shareholders of the company. They don't need to take shares. As soon as they subscribe the MOA & file it with ROC along with other incorp. doc they become the members of the company.
but not the share holders
they become shareholders only when they pay for the shares and shares are alloted to them.
CS Ekta
(Company Secretary)
(309 Points)
Replied 31 March 2009
So this is what I understood from all the discussions :
As per sec 41, subscribers to the memorandum on the registration of the company shall be entered as the members in the register of members.
But they become shareholders only when they pay for the shares and shares are alloted to them.
Further, a subscriber cannot refuse to take shares for which he/she had given his/her declaration to take the shares
So if any of the subscribers do not want to take shares then he can transfer those shares after subscribing.
Now, suppose on the incorporation of a company, as required by sec 41, we entered the name of the subscribers in register of members.But we receive the payment from subscribers after say six months from the date of incorporation.
And what date should be enetered in the share certificate issued?
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 31 March 2009
Since you really got confused and following wrong interpretation I have to step in with a long discussion based on my 4 year practical experience. Hope it’ll help you. I reserve my comment for Mr. Sumit and disclose them later.
Observe carefully,
One side you are saying as per sec 41, subscribers to the memorandum on the registration of the company shall be entered as the members in the register of members and on the other side you are saying that they become shareholders only when they pay for the shares and shares are alloted to them.
As I told you earlier Subscribers of MOA are deemed shareholders of the company. They don't need to take shares. As soon as they subscribe the MOA & file it with ROC along with other incorporation documents they become the members as well as shareholders of the company. Appreciate further have you ever filed form-2 for the subscribers? The answer would be No. That itself is a kind of proof that no allotment is required to be made to the subscribers. Further your view that So if any of the subscribers do not want to take shares is practically impossible.
Form-2 is not required to be filed for subscribers hence no formal allotment is required in case of subscribers. They are deemed members and shareholders of the Company.
Regarding receipt of payment from subscribers I would say ideally such amount should be deposited by the subscribers after incorporation of the co. in the newly opened bank a/c of the company and record the same in the first BM Minutes. (as told you earlier).
Alternatively, as there is no tracing (as far as ROC is concerned) of such amount, it may be deposited by them later. As a CS i would suggested you should opt I option to avoid any kind of future problem.
DATE OF ALLOTMENT TO SUBSCRIBERS AND DATE TO BE MENTIONED ON SHARE CERTIFICATE
Date of allotment to subscribers will be the date of incorporation of the company and the same date will also be used for printing on share certificate to be issued to subscribers.
1. Printing on share certificate of subscribers
2. as date of Allotment to subscribers
3. For the purpose of filling the column in register of member to enter the name of subscribers.
Even if you receive the amount from subscribers after 6 months the date of deemed Allotment and date on share certificate would remain the same i.e. date of incorporation of the company.
Hence, your view that they become shareholders only when they pay for the shares and shares are allotted to them is incorrect in my opinion & as per the discussion above.
However shares subscribed by them can not be forfeited as there is no issue of non payment of call etc. but they may be transfer later.
In case of any doubt please post it. I’ll definitely try my best to solve it. Regards-Ankur
CS Ekta
(Company Secretary)
(309 Points)
Replied 31 March 2009
Dear Ankur
Thanks a lot for such an elaborate answer. I am very greatful.
You have cleared all my doubts.
I got really confused from all the diff answers.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 31 March 2009
Thanks Ekta for the appreciation. I think it's my duty towards my profession to help my fellow company secretaries and all other professional friends.
Please find enclosed herewith sample first BM minutes to record issue (allotment) of share to the subscribers. I used to mention it as issue of share to the subscribers and not allotment to subscribers in minutes and in general discussions to avoid any kind of confusion. Best Regards Ankur Garg
CAclubindia
