suppose company has taken a unsecured loan and instead of paying back the loan the company adjusted such loan with share application money through book entry. my question is whether it is right to do it.
2 Replies
veeru sagar
(BBE,M.com,CA Final )
(468 Points)
Replied 13 June 2013
No. this is voilation of company Act 1956 . Bcoz the share application amount received by company before the allotment have to deposit into Specific Account and company can withdraw this amount only receipt of minimum subscripttion that is 90% of issued share application amount so Co. can not use the share application amount to set off the loan taken from bank
CA Final
(CA Final Student)
(856 Points)
Replied 13 June 2013
Agree with VEERU SAGAR .......
Good Explanation too...
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