Q.What is meant by "minimum subscription"? Explain the legal consequences if minimum subscription is not received in a public issue.

Minimum subscription as per SEBI guidelines is 90% of the issued shares/amount.

Minimum subscription is the minimum amount (expressed as a percentage of the total issue) that a company MUST receive in applications before it is legally permitted to make any allotment of shares. This rule protects investors from money being locked into a company that fails to raise adequate capital to start/run the proposed project.

As per SEBI (Securities and Exchange Board of India) guidelines, a company must receive subscription for at least 90% of the issued amount (i.e., 90% of the shares offered to the public) before it proceeds with allotment.

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Minimum subscription is the floor amount a company must actually receive from applicants before it is legally allowed to allot any shares at all.

Minimum subscription refers to the minimum amount which, in the opinion of the company's directors, must be raised through the issue of shares in order to meet certain essential needs of the business, such as:

• The purchase price of any property/assets to be acquired,
• Preliminary expenses and underwriting commission,
• Repayment of any money borrowed for the above purposes, and
• Working capital requirements for the initial period of operation.

This figure must be disclosed in the company's prospectus (SEBI regulations typically require it to be at least 90% of the issue size for a public issue). If the company does not receive applications for at least this minimum amount within the prescribed time (usually 30 days of the issue closing, as per SEBI/Companies Act rules), it cannot proceed with the allotment of any shares at all — all application money received must be refunded in full to the applicants.

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Minimum subscription is 90% of the issued capital — option (A).

Minimum subscription is the minimum amount which, in the opinion of the directors, must be raised by the issue of shares so that the company has enough funds to carry on its business. A company cannot proceed to allot shares unless it has received the minimum subscription. As per SEBI guidelines, the minimum subscription is fixed at **90% of the entir …

Minimum subscription, as per SEBI guidelines, cannot be less than 90% of the Issued Capital.

Minimum subscription, per SEBI guidelines, must be at least 90% of the issued amount.

Minimum subscription is the minimum amount that, as stated in the prospectus, must be subscribed by the public before a company can proceed to allot any shares. SEBI (Securities and Exchange Board of India) guidelines require that this minimum subscription figure must not be less than 90% of the issued amount (of that particular issue). This safeguard exists so that a company does not go ahead and start operating on an inadequate, half-raised capital base.

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5% of the Rs. 50 face value works out to Rs. 2.50, so (A) is correct.

As per the Companies Act and SEBI (ICDR) guidelines, the amount payable on application for a share must not be less than 5% of the nominal (face) value of the share. This is the statutory minimum application money.

Calculation for a share of face value Rs. 50:

Minimum Application Money = 5% × Rs. 50 = Rs. 2.50

Checking the options:

• (A) Rs. 2.50 = 5% of 50 ✓ (matches the statutory minimum)
• (B) Rs. 5.00 = 10% of 50
• (C) Rs. 6.00 = 12% of 50 …

Minimum subscription is 90% of the issued amount. If the company does not receive applications for at least 90% of the public issue, no allotment is made and the application money is returned.

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Prospectus = the public invitation document disclosing the company's details to prospective investors. The Or asks for minimum subscription — the minimum that must be raised before allotment.

A prospectus is any document described or issued as a prospectus inviting offers from the public for the subscription or purchase of shares or debentures of a company; it must disclose prescribed information so investors can make an informed decision.

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