The contract, on the basis of which the shares have been allotted, should be referred to and the allotment confirmed by reference to the Minutes of the Board of Directors. It should also be verified that a copy of the contract as required by Section 75(1)(b) of the Act has been filed with the Register of Companies within one month of the date of allotment and in the absence thereof, a memorandum in writing stating particulars of the contract has been filed. Sometimes, in view of the nature of the transaction, it may be difficult to know whether an allotment is for cash or for a consideration, other than cash, for instance, allotment of shares in adjustment of a debt owed by the company. In such a case, if the allotment is made in adjustment of a bonafide debt payable in money at once, the allotment should be considered as against cash. (Spargo’s Case 1873, 3 Ch. A 407). This position should be kept in view when inquiring into matters stated in Section 227(1A). Again if the shares are allotted on a cash basis, though the amount is actually paid later, it should constitute an allotment against cash.
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