The authorized capital of a private limited company is say 50 lakhs. Initial allotment of shares was for 20 lakhs. The company accepted 25 lakhs from one party A as share application money. This amount was correctly accounted in the balance sheet submitted during that financial year. The shares were not allotted. The Managing director and the only other director(his wife) later brought in another 30 lakhs and issued shares to own names after a few years. Now the authorized capital limit is reached.
1) Can the MD accept share application money more than that authorized by the AGM? Can the new issue be made void on this account?
2) The party A trusted the MD and had not forced him to issue shares earlier. Can the party A approach the court asking for issuing of shares to him?
Thanks
