Corporate Law
Lavanya Venkatanarayanan
(Querist) 05 August 2009
This query is : Resolved
A Private Limited Company with Rs.10 lakh authorised Capital,
Issued & Subscribed Capital is Rs.1 lakh.
It has a share Application Advance of Rs. 20 lakhs.
It is to repay its Share Application Advance now.
Is the resolution passed in the Board Meeting of the Directors is enough for such repayment?
Will the amount carry any Interest?
A V Vishal
(Expert) 06 August 2009
Lavanya
Point 1: Auth Capital : Rs 10.00 Lakhs, Share application cannot exceed 9 Lakhs since the minimum share capital has to be 1 lakh which is alright, logically & legally, a private company can circulate the share capital in relatives, friends and employees, so how did it raise share application money of Rs 20 lakhs i.e 10 lakhs over and above the prescribed limit, the extra money has to be treated as unsecured loans, further if this amount of 10 lakhs has to be treated as USL then it will attract 58AA of the companies Act, hence advise to return the amount immediately after passing a board resolution which will be sufficient. For a pvt ltd company there is no compulsion to pay interest on the share application money, it is discretionary on the management part whether to pay interest or not
