Q.Write a short note on: Minimum Subscription

Minimum subscription is the minimum amount of share capital that must be subscribed by the public before a company can allot shares. If it is not received within the prescribed period, the application money must be refunded.

Minimum subscription refers to the minimum amount which, in the estimate of the directors, must be raised by the issue of shares so that the company has enough funds to meet its basic requirements — such as the purchase of fixed assets, preliminary expenses and working capital. The amount of minimum subscription is stated in the prospectus. As per the Companies Act, a public company cannot proceed to allot shares unless the minimum subscription stated in the prospectus has been subscribed and the application money received; if it is not received within the specified time, the applica …