WHY COMPANIES ARE LEVIED HUGE FINES FOR NOT OPENING OF SEPARATE BANK ACCOUNT IN CASE OF PRIVATE PLACEMENT OR PREFERENTIAL ALLOTMENT?

 WHY COMPANIES ARE LEVIED HUGE FINES FOR NOT OPENING OF SEPARATE BANK ACCOUNT IN CASE OF PRIVATE PLACEMENT OR PREFERENTIAL ALLOTMENT?

JAY AMBE SUPERMARKETS LTD WAS FINED BY ROC AHAMADABAD Rs 10 CRORES FOR NOT OPENING SEPARATE BANK ACCOUNT AND FOR NOT FILING PAS-3

•             Section 42(6): application money must be kept in a separate bank account in a scheduled bank and used only for permitted purposes.

•             Subscription money belongs to the proposed investors until the statutory conditions for allotment are satisfied.

•             Therefore, the company should not be able to treat the money as its ordinary working capital.

•             PAS-3 establishes the statutory record of the allotment.

ROC CASES — FAILURE TO MAINTAIN SEPARATE BANK ACCOUNT

# R V SECKAR , Your compliance expert 79047 19295,