Company law

Anand Paleja (Querist) 23 December 2008 This query is : Resolved
is there any limit for allotment of shares to subscribers on incorporation and for issue of share certificates and can the shares be allotted to subscriber on incorporation at premium rather then on face value.

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ESTHERPRIYA (Expert) 23 December 2008
The incorporation of private company does not requires all this formalities strictly. But in case of Public limited company incorporation there should be five lakh or more capital. The share certificate will not be issued at the time of incorporation itself. It is long process. After incorporation, you should get commencement certificate and then conduct board meeting and then approve the capital and issue of shares to public. 25% of shares should be issued to public. At that time you can discuss as to the share value and its issue value.

Bharti (Expert) 23 December 2008
Companies act doesnot provide any time line om issue of subscriber shares.

but the company( being Pvt Ltd) should issue subscriber shares before the closure of the financial year, for the simple reason that the auditors would qualify in the auditors report that the company is yet to issue minimum capital.
( and this violates section 3(1)(iii) of companies Act, 1956.)

and public limited companies will only get Certificate of Commencement of business after issuing minimum subscribe capital provided in CA.