Question

If the amount of minimum subscription is not received to the extent of _______, the issue disslove.

• A. 85%
• B. 90%
• C. 95%
• D. 80%

Answer 1

The correct option is B 90%

It is possible for the shares of some companies to be oversubscribed which means that applications for more shares are received than the number offered for subscription through the prospectus. Under such a condition, the alternatives available to the directors are as follows:

(i) They can accept some applications in full and totally reject the others,

(ii) A pro-rata distribution can be made by them,

(iii) A combination of the above two alternatives can be adopted by them.

If the amount of minimum subscription is not received to the extent of 90%, the issue devolves. In case the applications received are less than the number of shares offered to the public, the issue is termed as 'under subscribed'.