Bhuvan Ltd. issues 5,00,000 shares of 310 each for public subscription. Application along with money was received for 4,00,000 shares. Can company allot these shares? Explain.

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Solution

Whether Bhuvan Ltd. can proceed with allotment or not is question-based upon the amount that has been stated as a minimum subscription in the prospectus of the company. In case,Bhuvan Ltd has specified any amount lesser than 80% as the minimum subscription then they can proceed with allotment of shares to the applicants. This is because of Section 39 (1) of Companies Act, 2013 that states that Minimum Subscription is the amount stated in the prospectus as the minimum amount that must be subscribed. However, earlier it was specified that 90% is minimum subscription amount but same clause has been removed with the applicability of new act.

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