Question

No shares can be allotted by a public company unless it collects ___________.

• A. minimum subscription
  
• B. maximum subscription
  
• C. capital
• D. None of these
  

Answer 1

The correct option is A minimum subscription

• In order to prevent companies from commencing business with inadequate resources, it has been provided that the company must receive applications for a certain minimum number of shares before going ahead with the allotment of shares. According to the Companies Act, this is called the ‘minimum subscription’.
  
• No shares can be allotted by a public company unless it collects minimum subscription.
  
• The limit of minimum subscription is 90 per cent of the size of the issue. Thus, if applications received for the shares are for an amount less than 90 per cent of the issue size, the allotment cannot be made and the application money received must be returned to the applicants.