Query regarding Share application money pending allotment

[deepal shah]

Hi Professionals,

Please guide me as to till how many years can a company (pvt or public) carry forward an amount standing as "SHARE APPLICATION MONEY PENDING ALLOTMENT " in its books of accounts.. Is there any circular or notification in this regard by MCA..??

Regards

Deepal.

[CS. JAYANT SUTHAR]

see sec 205C

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Jayant Suthar

M.Com., ACS, CWA (Int.)

[Sanjeev Pathak]

Hi Deepal,

 

You need to check Sch VI of the Companies Act, 1956.....forget about how many years......Sch VI very clearly says that " Share Application MOney Pending Allotment" means it has to backed by share application.....and it will remain open till allotment is done....now this account will be open in the books of account only till issue is open and money is kept for pending allotment....

 

So no years...you can only do temp adjustment....

 

There are many more things involved in this....cant explain everything on mail.

 

Regards,

Sanjeev

[deepal shah]

Thanks a lot!

[nikit kumar]

Dear Member,
Pls find the treatment under Rev. Sch VI

Application money received for allotment of securities and due for refund and interest accrued thereon. Share application money includes advances towards allotment of share capital. The terms and conditions including the number of shares proposed to be issued, the amount of premium ,if any, and the period before which shares shall be allotted shall be disclosed. It shall also be disclosed whether the company has sufficient authorized capital to cover the share capital amount resulting from allotment of shares out of such share application money. Further, the period for which the share application money has been pending beyond the period for allotment as mentioned in the document inviting application for shares along with the reason for such share application money being pending shall be disclosed. Share application money not exceeding the issued capital and to the extent not refundable shall be shown under the head Equity and share application money to the extent refundable i.e., the amount in excess of subscription or in case the requirements of minimum subscription are not met, shall be separately shown under ‘Óther current liabilities’

[anandteerth hipparagi]

Hi there,

 

In addition to info provided by members, I just want to throw light on Unlisted Public Companies (Preferential Allotment) Amendment Rules, 2011.

 

Rule 4(4) of the above reads as follows:

 

 

 

"(4) Any allotment of securities shall be completed within sixty days from the receipt of application money and in case the company is not able to allot the securities within the said period of sixty days, it shall repay the application money within fifteen days thereafter, failing which it will be required to be re-paid with interest at the rate of twelve percent per annum"

 

Please note that these rules are applicable only to unlisted Public Companies.

 

Copy of the Rules is attached for your reference.

 

 

On Fri, Apr 26, 2013 at 12:06 PM, deepal shah <csdee...@gmail.com> wrote:

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Best Regards,

CS Anandteerth Hipparagi

Partner & Co-Founder

A H & Associates

C o m p a n y S e c r e t a r i e s

No.17/43, 1st Floor, Dr. Rajkumar Road,

4th N Block, Rajaji Nagar, Bangalore - 560010, Karnataka.

Cell: +91 81475 88559.

[Sanjeev Pathak]

If you dont want to allot the share and still if you want to keep the money in the Company...than it will be treated as unsecured liability and will not fall under shareholders fund as it was done earlier......so the promoters has to take a call on treatment of the funds in the Balance Sheet.

 

you can still treat the fund as Advance Against Share Application money...but under Unsecured Liability.

 

[corp.compliance003]

Dear Members,

Our Public Co. does not want to refund the money received two years back for allotment of Shares. Shares have not been allotted.

Can anyone tell me the best option for treatment of this money???

Regards,

VIMAL SHARMA