Share application money in Private Limited Company in India:
:Generally allotment of shares and share application money in the case of unlisted companies and private companies will be governed by their private placement documents. If there are no terms in the document, then general law of contract will be applicable. The allotment has to be made before the share application money is utilised. If the money is utilised, then it will tantamount to acceptance of the share
application and therefore the applicant will have the right to file a civil suit for allotment. To keep the money un allotted for an unduly long time will be risky. Income tax authorities have issued notices in respect of some companies which keep application money un allotted for a long time, probing whether they are unexplained credit etc.
application and therefore the applicant will have the right to file a civil suit for allotment. To keep the money un allotted for an unduly long time will be risky. Income tax authorities have issued notices in respect of some companies which keep application money un allotted for a long time, probing whether they are unexplained credit etc.
**CA-SAAB
