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. Subscribed capital
• C. Reserve capital
• D. Issued capital

Hint:

Minimum subscription (90% requirement) applies to the specific amount of capital issued or offered to the public in an issue, not the total authorised capital.

Answer 1

The Correct Option is B

The objective is to ascertain the base amount against which the minimum subscription of capital must not fall below 90%, as stipulated by the Securities and Exchange Board of India (SEBI).

1. Clarification of SEBI's Minimum Subscription Rules:
SEBI's guidelines establish a minimum subscription threshold. This requirement mandates that a company must secure a specific percentage of the capital it offers to the public before it can proceed with the allocation of securities. The purpose is to safeguard investors and ensure the financial feasibility of the issuance.

2. Pinpointing the Key Metric:
SEBI dictates that the minimum subscription for a public offering cannot be less than 90% of the Subscribed Capital. Subscribed Capital represents the total capital amount offered by the company for subscription through the public issue, as detailed in the offer document.

Conclusion:
As per the guidelines of the Securities and Exchange Board of India (SEBI), the minimum subscription of capital must not be less than 90% of the Subscribed Capital.