Question

The issuer company cannot make allotment of shares unless ______________.

• A. There is over subscription
• B. The minimum subscription has been subscribed
• C. Promoter has subscribed
• D. All of the above

Answer 1

The correct option is B The minimum subscription has been subscribed

Minimum Subscription: It is said to be the minimum amount which as per the directors must be raised by issuing shares to overcome various expenses like working capital required, preliminary expenses, repayment of money borrowed or any other payment etc. Company has to make sure that it must receive share applications for minimum subscription as mentioned in the prospectus, before it applies for the certificate pf commencement of business. Company has to refund back all the money received from the applicants and cannot make any allotment, if the amount of capital subscribed by the public is less than the minimum subscription or if the company could not get minimum subscription within 120 days of the issue of prospectus.