Share Application Money Pending Allotment

If the money received from NRI, it should be allotted within 180 days.

However, as per Section 205C(b), this pending allotment money shall be transferred to IEPF.

Experts views are seeked.

Hi

As such, companies act does not specify any time limit for allotment of shares out of share application money or refund thereof but it is prudent to refund the sharae application money as soon as allotment of share are made out of same tranche. I would also like to add that being the nature of share application is of current liability, it should be dealth with accordingly.

Regards

Sudhir

Regards- Sudhir

The limit of Authorised Capital of a Pvt. ltd. Company is Rs. 1crore. It has issued capital of Rs. 1 crore but received Rs. 1.25 crores.Can it show Excess amount of Rs. 50 lacs as Share Application money received as advance in its books of account and subsequently raise the Authorised Capital and then make ther allotment or it has to immediately refund the excess amount or show it as loan?  

Company has to return the due money. In case the unpaid amount due with the Company on the date of AGM, it has also to submit form 5 INV. In case of Unlisted Public Company, all moneys kept for allotment must be allotted within 60 days of its receipt or refunded after that the Company is requied to repay the money with interest.

In case of Private Company there is not any such time limit. Company can suitably increase its Authorised Capital and issue the shares.

Please guide for the following,

My company is a private limited company,  the share holders are not Indian citizenz, but we had  share application money  from a long period. How to disclose this in the financial Statements according to the amended schedule VI guidelines. Is there any  time limit to repay.

As such in case of private company there is no specified period within which the same is to be allotted or returned. Thus, in case you need to continue with the Share Application Money you need to have proper disclosure of the reason why you are not allotting or returning the share application money.

In the amended schedule VI, the company has to disclose whether there were sufficient authorised capital for share application money pending allotment. Moreover, in a pvt . ltd. company since there are a very limited number of shareholders and normally directors are also the shareholders , they know in advance how much shares could be allotted. Therefore keeping substantial money in share application pending allotment will creat suspicion in the minds of RBI, ROC etc.,They may suspect that the object of the company is to avoid filing fee, stamp duty etc.

Therefore, please take apprpriate decision in the matter in consultation with your statutory auditors to avoid future legal complications.

Thanx.

Hi friends..... I am having a doubt about  Share Application money received from a SRILANKAN Based company in USD dollars.....The money received by the Indian company and used it….. Still now the company has not allotted any shares…. What are consequences as per IT act and RBI.

The Indian company is Private limited company......