Minimum Subscription

Any public company which invites the public (from the prospectus) to subscribe to its securities, that company can allot those securities only after that company has subscribed to the minimum amount mentioned in the prospectus. Minimum subscription is the amount that the company has shown/described in its return as the minimum amount of subscription, which is a legal requirement for that company to receive by the date of closure of the issue.

The quantum of the minimum amount is determined by ‘SEBI’. The promoters, directors, etc. of the company can determine the quantum of the amount of capital to be issued. The formula for determining the amount of the minimum subscription is given in the regulations of “SEBI”. According to this formula, each issuing company has to pay 90% of the net amount of the issued capital as the minimum subscription amount. will have to be obtained.

The amount of securities reserved for certain classes and the amount of securities to be allotted on priority basis are not taken into account while computing the net amount of the issued capital. It is to be noted that if the full issue price of the securities is not sought as application amount, then the minimum amount will also be calculated in proportion to the amount sought.

The Companies Act, 2013 states that the minimum subscription amount should be received within 30 days from the date of issue of return or within such period as may be prescribed by the SEBI. SEBI has stipulated by its regulations that the minimum subscription amount should be received by the issuing company by the date of closure of the issue.

The provisions regarding minimum subscription are not applicable in the following cases-

(i) if the issue of securities is being made under an offer for sale to the existing members of the company

(ii) if the securities are being offered to the members of the company under subsequent issue and the members do not have the right to relinquish the offerers of those securities in favor of any other person.

Consequences of non-receipt of funds

If the minimum amount of subscription is not received, the following results are there- (i) No allotment – ​​If the issuing company fails to get the minimum subscription amount. then it cannot allot the securities offered in that issue.

(ii) Refund of subscription amount – If the issuing company is not able to get the minimum subscription amount, then it has to refund the entire subscription amount received within 15 days from the date of closure of the issue.

Previous articleWhat is fraction? How many types are these?
Next articlewhat is the requested capital


Please enter your comment!
Please enter your name here