Is this true in case of pvt. placement of shares
Hello,
Earlier, under old Companies Act regime, many companies accepted share application money under private placement and utilized the same for the business purpose even without allotment of shares. Only Schedule VI of the Old Companies Act provided the manner to treat the same in the Balance Sheet of the Company.
I read in some blog that Now, Section 42 of the Companies Act, 2013 puts prohibition over the said practice. W.e.f 01-April 2014, Companies accepting Share Application money under private placement have to allot the securities against the Share Application money received within 60 days. If the securities are not allotted within a period of 60 days, the whole application money is required to be refunded within 15 days from the date of completion of 60 days. If the company fails to repay the application money within the said 60 days period, it shall be liable to repay that money with interest @ 12% p.a. from the expiry of the 60th day.
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Another important point to be noted is that the Company will have to open separate bank a/c to receive share application money and will not be able to utilize the share application money unless shares are allotted.
IS THIS TRUE?? and can u refer me a link of any govt. portal stating the same thing.
Thanks,
Vineet