Allotment of shares

[kanak jain]

Dear All

 

 

Please provide me complete procedure for preferential allotment of shares not warrants.

 

thanks & regards

 

cs kanak jain

[Jayashree Chandrasekaran]

you need to be clear...preferential allotment by what type of company
Jayashree

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C.JAYASHREE
PARTNER
S.GANESH&ASSOCIATES
CHENNAI
98840 17120

[Neeraj Jain]

Dear Members,

Greetings,

I have one query?

What is the time limit for allotment of shares after receiving of share application money?

As per my views it is general practice to allot shares within 6 months from the date of receiving the share application money and as per section 113 of the Companies Act, 1956 once allotment is completed these shall be issued within 3 months. 

On the other side if the share application money is still pending in the Company’s book and company not allotted shares for next two or three years then how it is to be treated. Whether it is to be shown under unsecured loan or elsewhere.  

Request members to advise.

Best Regards,

Neeraj Jain

 

 

 

 

[Samad Shariff]

Hi,

 

If the share application money is still pending in the company then it should be treated as a liability and shown under separate head i.e share application money head.

 

Members please correct me if I am wrong.

 

Regards,

 

Samad Shariff

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[Abhay Kulkarni]

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Dear Neeraj,

If the share application money is still pending, shares has been not allotted for that receiving money. Then it is part of your share capital and it is shown in the balance sheet of that company by heading " Share Application Money ".

It is treated as part of ur companies share capital. But again if these money from the long time don't show because of in Income Tax, it is treated as Income of the Company included into its profit, at the time of scrutinize it.

So far as it concern, you have choice to issue the Shares or Refund it.

On the point of view of Pvt Ltd, it do not much considered for allotment of shares by receiving Share Application Money in practically.

Thanking you,

Regards

Abhay Kulkarni

Company Secretary

+91-95 52 52 40 04

[Ankit Poddar]

Dear Neeraj,

Following are the provisions of Unlisted Public Companies (Preferential Allotment) Amendment Rules, 2011 with respect to the allotment of shares when share application money is received by the company:

“8. Invitation and allotment of securities.-

(1) No fresh offer or invitation shall be made unless the allotment with respect to any offer or invitation made earlier have been completed in terms of sub-section (9) of section 60B of the Companies Act, 1956.

(2) Any offer or invitation not in compliance with sub-section (1A) of Section 81 read with sub-section (3) of section 67 of the said Act, shall be treated as a public offer and the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall be complied with.

(3) All monies payable on subscription of securities shall be paid through cheque or demand draft or other banking channels but not by cash.

(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:

Provided that the monies received on such application shall be kept in a separate bank account and shall not be utilised for any purpose other than—

(i) for adjustment against allotment of securities; or

(ii) for the repayment of monies where the company is unable to allot securities.

(5) No company offering securities shall release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about such an offer”.

Views of the other members are solicited.

Thanks & regards,

Ankit Poddar

[Neeraj Jain]

Dear Ankit,

As we are taking about Simple/normal allotment not the Preferential Allotment:

It is very clear from the Preferential Allotment Amendment Rules, 2011, that:

“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”

On the other side there is quit difference between simple or preferential allotment. Even the Companies Act, 1956 is silent about time to allotment of shares or any rules made thereunder.

As per my views it is general practice to allot shares within 6 months and if Company not allotted the shares then there is no penal action against the Company. I am agree with Mr. Abhay Kulkarni point of view that if, share application money is pending in the books then it is shown in the liability side.

Member’s views are solicited.

 

Regards,

Neeraj Jain

[Nithyakalyani Kannan]

Dear members,

Even I have a query. The Rules prescribe the time frame within which the shares to be allotted from the date of receipt of application money and the refund time frame. What is the position if the Company is keeping application money in its account since April, 2011. Kindly let me know the procedure.

 

Thanks & regards,
CS Nithyakalyani M

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From: Neeraj Jain <cs.nee...@gmail.com>
To: csmy...@googlegroups.com
Sent: Thursday, 19 January 2012 11:09 AM
Subject: Re: [CSMysore] Allotment of shares

[shreya shah]

Dear Friends,

As far as a private limited company is concerned, The Companies Act,
1956 does not specify any time limits within which shares have to be
issued by the company after the receipt of the share application
money. It is at the discretion of the Directors.

As per the FEMA Rules & the Consolidated FDI Policy, if there is a
Foreign Inward Remittance involving the receipt of money from a non
resident individual or body corporate then shares have to be allotted
to such investor within 180 days from the receipt of the share
application money failing which the company would be subject to
serious penalties.

As per the amendment in the Unlisted Public Companies (Preferential
Allotment of shares) Rules, 2000 dated 14.12.2011, an unlisted public
company has to allot shares within 60 days of the receipt of the share
application money, failing which it has to be refunded within 15 days
else the company has to pay interest at 12% p.a.

So depending upon the type of the company and the type of the money
received, the respective stand has to be taken ......

>>(4)Any allotment of securities shall be completed within sixty days from

[Premnarayan Tripathi]

Dear Friends,

I endorse views of Ms. Shreya Shah.

That is the great LACUNA in company law is case of a Pvt. Company.

I've seen cases where the Share Application Money are pending for allotment
for about 5 years also. Even the ROC's are taking any serious steps to ask
co. for giving reason for not allotting shares against those money.

The only stipulation in the CA, 1956 is that the Company is required to
deposit uncapitalized amount with IEPF a/c pursuant to Sec 205C.

Other members are requested to through lights on the matter.

Thanks & regards,

CS. Premnarayan Tripathi

Dear Friends,

>> than-

[KAGGANTY NAGESH BABU]

As per  Section 205  (2) (b )

 

A company   has to allot within 7 years  for the receipt of application, otherwise said unclaimed amt has to be transferred to IEPF.

 

Provisions for  your reference………………..  

 

Establishment of Investor Education and Protection Fund.

205C. (1) The Central Government shall establish a fund to be called the Investor Education and Protection Fund (hereafter in this section referred to as the “Fund”).

(2) There shall be credited to the Fund the following amounts, namely :—

             (a)   amounts in the unpaid dividend accounts of companies;

             (b)   the application moneys received by companies for allotment of any securities and due for refund;

             (c)   matured deposits with companies;

             (d)   matured debentures with companies;

             (e)   the interest accrued on the amounts referred to in clauses (a) to (d);

              (f)   grants and donations given to the Fund by the Central Government, State Governments, companies or any other institutions for the purposes of the Fund; and

             (g)   the interest or other income received out of the investments made from the Fund:

Provided that no such amounts referred to in clauses (a) to (d) shall form part of the Fund unless such amounts have remained unclaimed and unpaid for a period of seven years from the date they became due for payment.

Explanation.—For the removal of doubts, it is hereby declared that no claims shall lie against the Fund or the company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.

(3) The Fund shall be utilised for promotion of investors’ awareness and protection of the interests of investors in accordance with such rules as may be prescribed⁵.

(4) The Central Government shall, by notification in the Official Gazette, specify an authority or committee, with such members as the Central Government may appoint, to administer the Fund, and maintain separate accounts and other relevant records in relation to the Fund in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India.

(5) It shall be competent for the authority or committee appointed under sub-section (4) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.]

 

On Thu, Jan 19, 2012 at 9:48 AM, Neeraj Jain <cs.nee...@gmail.com> wrote:

Neeraj Jain

 

 

 

 

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Regards

Nagesh Babu K L

+91 98867 65752

[shreya shah]

Dear Mr.Nagesh Babu,

Reading the Section in depth reveals the following ........

1. the application moneys received by companies for allotment of any
securities and due for refund - IS IT MANDATORY THAT THE MONEYS
SHOULD BE DUE FOR REFUND, .........

2. unless such amounts have remained unclaimed and unpaid for a period
of seven years from the date they became due for payment. - DOES THIS
MEAN THAT THE APPLICANT SHOULD CLAIM THE MONEY BACK AND IT SHOULD
REMAIN UNPAID BY THE COMPANY ..........

If the answer to the above two questions is YES, then it implies that
only the money that the applicant has asked back and the company has
not refunded should be transferred to IEPF .....

Could you pls voice an opinion on this ..........

Thanks & Ragards,
Shreya Shah, ACA, LCS.

[BINDU MADHAVA]

If the shares are not allotted, itself amounts to due for refund from day 1

[KAGGANTY NAGESH BABU]

Dear Shreya,

 

If the amount unclaimed and unpaid  for  seven years it should  be transferred to IEPF

 

For eg Foreign currencty  there is a time of 180 days.

 

It is implied if shares are not alloted it is due for refund. If task not done it leads to refund.

 

Time lines for due refund depends on Management Call.

 

But we wont see time frame for due for refund.

 

Yes, applicant should raise voice for not alloting shares.

 

This is only my thought.

 

 

Regards

Nagesh Babu K L

 

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[shreya shah]

Yes Mr.Naresh ......... I endorse you views ........ Transfer to IEPF
is a deeming condition ......... Thanks for the clarifications ....