1) Consequences of Delay in Issuing Shares

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.

Penalty: In case a company contravenes the provisions of section 42, the company, its promoters
and directors shall be liable to pay a penalty which may extend to the amount involved in the
offer or invitation or Rs. 2 crores, whichever is higher. The company shall also refund all
amounts collected to the subscribers within a period of 30 days of the penalty order.

Further as per Companies (Acceptance of Deposit) Rules, 2014, if the securities for which
application money was received cannot be allotted within sixty days from the date of receipt of
the application money and such application money is not refunded to the subscribers within
fifteen days from the date of completion of sixty days, such amount shall be treated as a
deposit under these rules. Any adjustment of the amount for any other purpose shall not be
treated as refund.

FDI: In case the company receives FDI, earlier as per FEMA Regulations, the shares were
required to be allotted within 180 days. However, now the time limit has been altered in
consonance with the Companies Act 2013 and reduced to 60 days of inward remittance.1

2) Filing without UIN

 The allotment of UIN does not constitute an approval from the Reserve Bank for the investment
made/to be made in the JV/WOS. The issue of UIN only signifies taking on record of the
investment for maintaining the database. The onus of complying with the provisions of FEMA
regulations rests with the AD bank and / or the Indian party.

One of the attachments required to be filed with Form FC-GPR is:

UIN copy of all inward remittances for which shares are allotted. If UIN is applied for and yet to
be received from RBI, attach copy of the UIN application filed with RBI through AD Category I
bank. 2

1
Samrish Bhanja, Share Application Money under Private Placement (Feb. 22, 2018), available at
http://www.bsamrishindia.com/share-application-money-under-private-placement/.
2
TG Team, How to Report Foreign Investment to RBI through Authorized Dealer (July 15, 2016), available at
https://taxguru.in/rbi/procedure-reporting-foreign-investment-rbi-authorized-dealer.html.