A company has applied for shares in a group company but yet not alloted shares in it for 3 years subscriber company is a listed public co and subcribed one is unlisted public company? Is there any legal provision to be complied in case as allotment is pending for quite a long period.
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Share application money pending allotment
Replies (3)
There is no legal provision as such. But application money pending for unusually long time can attract scrutiny from tax authorities, statutory auditor, tax auditor and ROC. In case of non resident applicants, shares have to be allotted within 180 days.
regards,
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.
But record this transaction in minutes also.
Thanks
RG
Can you site some case law where scrutiny or inquiry made has been done for un-allotted shares.
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