Which among the following statements is NOT true

Looking at each statement:

Statement 1: Share application account is a personal account

Share Application Account represents money received from applicants (persons) who apply for shares. Since it represents dealings with persons, it is classified as a personal account. This statement is true.

Statement 2: The director of a company must be a shareholder

Under the Companies Act, there is no mandatory requirement for a director to hold shares in the company. A person can be appointed as a director without being a shareholder. This statement is NOT true.

Statement 3: Paid up capital can exceed called up capital

The relationship between these capitals is:

Subscribed Capital → Called up Capital → Paid up Capital

Called up capital is the amount the company has asked shareholders to pay. Paid up capital is what shareholders have actually paid out of the called amount.

Since paid up capital is a subset of called up capital, it can either be equal to or less than called up capital, but can never exceed it. This statement is NOT true.

For example: If called up capital is ₹80,000, paid up capital can be ₹80,000 (fully paid) or ₹70,000 (partly paid), but never ₹90,000.

Statement 4: Capital reserves are created from capital profits

Capital reserves arise from capital profits such as profit on issue of shares at premium, profit on redemption of debentures, profit on sale of fixed assets, etc. These are non-trading profits of capital nature. This statement is true.

Therefore, statements 2 and 3 are NOT true.