Question

The minimum subscription is the ______of the issued amount.

• A. 50%
• B. 80%
• C. 75%
• D. 90%

Answer 1

The correct option is D 90%

Minimum subscription refers to the smallest amount required by the company for its preparatory functions. It has been provided by the Companies Act, that the firm must obtain applications for a certain minimum number of shares before progressing ahead with the allotment of shares in order to deter companies from commencing business with scarce resources. This is called the ‘minimum subscription’. The limit of smallest subscription is 90% of the size of the subject.

The smallest number of protection which may be employed for in any new issue. The Companies Act of 1956 created a legal pattern for this, stating that an organization can only offer a certain quantity of shares to the public that the company can really pay for if the shares are drawn in by the buyer.

For e.g. if the company is issuing 100 shares to the public, then the 90% of the 100 shares should be get subscribed that is 90 shares should be subscribed to went ahead with the allotment.