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CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Private Funding

Under the Companies Act, 2013, a company allots securities on private placement and has received application money from the identified persons. Which statement correctly describes the time limit for allotment?

A company making a private placement must allot the securities within sixty days from the date it receives the application money. If it cannot, it must repay the money within a further fifteen days, failing which interest at twelve per cent per annum is payable.

  1. ASecurities must be allotted within sixty days from the date of receipt of application moneyCorrect
  2. BSecurities must be allotted within thirty days from the date of receipt of application money
  3. CSecurities must be allotted within fifteen days from the date of receipt of application money
  4. DSecurities must be allotted within ninety days from the date of the board resolution

Explanation

Section 42(6) requires allotment within sixty days from receipt of application money. If allotment is not made, the money must be repaid within fifteen days after those sixty days expire. The thirty-day and fifteen-day options mix up this period with the refund period or the penalty refund period.

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