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    Allotment can be done before credited application Money in case medium was Cheque

    Posted By : SARIKA / Published on : 30-Sep-2022 08:27 AM / View : 349 / Comment : 1

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    Please confirm :

    As per Section 39 of the Companies Act, 2013 (“The Act”) states that:

    “No allotment of any securities of a company offered to the public for subscription shall be made unless the amount stated in the prospectus as the minimum amount has been subscribed and the sums payable on application for the amount so stated have been paid to and received by the company by cheque or other instrument”.

    According to the above-quoted provisions, the minimum subscription and application money are the most important requirements for a valid allotment & filing of PAS-3

    As a result, one could say that shares cannot be Allot until the application money has been paid to or received by the company (credited) via cheque or other instrument.

    Is it right ? or we have any option ?
    Read more on : case medium cheque money application done before credited allotment

    • As per the provisions of the Companies Act, 2013, and the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, a company can only allot shares once it receives the application money from the applicant.

      In the case of payment through a cheque, the company can only allot shares after the cheque has been cleared and the application money has been credited to the company's bank account. Until then, the company cannot proceed with the allotment process.

      Therefore, in the case of payment through a cheque, allotment cannot be done before the application money is credited to the company's bank account. The company must ensure that all regulatory requirements are met before proceeding with the allotment process to avoid any legal issues or non-compliance.

      04-04-2023 / 09:22:19 AM
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