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Treatment of share application money

CS Ekta (Company Secretary) (309 Points)

17 April 2009

Can a Company recieved share application money before increasing the authorised share capital?

If yes, what should be the accounting treatment of the application money raised in such case?

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4 Replies

madhur gupta (student/article ) (1022 Points)
Replied 17 April 2009

no co.cant receive share application money without increasing its authorized capital

there is default on company

however matter of journal entry is concerened it will remain normal one i.e

bank ..........dr TO share application money

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 18 April 2009

Dear Friend

Issued ,subscribed and allotment is ap part of Authorised capital, u can not issued and allot securities in excess of Authorised Capital. So for Safety side if u have already received share application money, i sugges that u will transfer these money to seperate account until and unless u increase ur Authorised capital for certein period, otherwise u will refund the same mony to subscriber with or without interest as per Companies Act, 1956.

Regards

Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 18 April 2009

Agree with Mr. Ajay

srajesh (Kerala) (30 Points)
Replied 23 November 2009

Dear,

Can we bring share application money other than by way of cash or bank? Through a Journal like Party A/c Dr to Share Application money in anticipation of receiving funds in the future (specifically in the case of a Private Limited Company.