Question

According to Securities and Exchange Board of India (SEBI) guidelines, minimum subscription of capital cannot be less than 90 of:

• A. Authorised capital
• B. Issued capital
• C. Reserve capital
• D. Subscribed capital

Hint:

Minimum subscription is crucial for the validity of a public issue. It's always calculated as 90% of the *Issued* amount, not the Authorised amount. Failure to achieve minimum subscription requires a refund of all application money.

Answer 1

The Correct Option is B

Minimum Subscription refers to the minimum amount that must be subscribed by the public for the company to proceed with the allotment of shares. According to SEBI guidelines (and also the Companies Act, 2013), this amount must be at least 90% of the capital *issued* to the public. If the minimum subscription is not received within the stipulated time (usually 30 days from the issue of prospectus, extendable), the company must refund the application money received. Therefore, the 90% threshold applies to the Issued Capital.