hi,
can anyone suggest me the correct treatment of share application money for private limited company ?
please also suggest the time limit of keeping the same in books of accounts
jitender kumawat (Article) (24 Points)
17 June 2010hi,
can anyone suggest me the correct treatment of share application money for private limited company ?
please also suggest the time limit of keeping the same in books of accounts
Mitali Agarwal
(Company Secretary)
(638 Points)
Replied 17 June 2010
Share Application money can be kept for as much period as desired by the company.
There is no time limit. But Income tax Deptt. may question if kept for a long period.
It can be shown in the Balance Sheet after Paid up Share Capital as "Share Application Money" (pending allotment).
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 17 June 2010
Agree...
However do not forget to check the terms of subscripttion agreement between the prospective investor and Issuer Company regarding refund of share application money etc.
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.
Regards
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