The minimum amount of capital which must be subscribed by the public before allotment is called:

Question

Passage: Issue and Forfeiture of Shares On January 1, 2024, the Director of X Ltd. issued for public subscription 50,000 equity shares of Rs. 10 each at Rs. 12 per share payable, Rs. 5 on application (including premium), Rs. 4 on allotment and the balance on call on May 01, 2024. The issue was closed on February 10, 2024 by which date applications for 70,000 shares were received. Of the cash received Rs. 40,000 was returned and Rs. 60,000 was applied to the amount due on allotment, the balance of which was paid on February 16, 2024. All the shareholders paid the call due on May 01, 2024 with the exception of an allottee of 500 shares. These shares were forfeited on September 29, 2024 and reissued as fully paid at Rs. 8 per share on November 01, 2024. The company, as a matter of policy, does not maintain a calls-in-arrears account. % Question What amount will be credited to Equity Share Application Account on February 10, 2024?

Answer 1

Step 1: Definition of Minimum Subscription
Minimum Subscription is the lowest amount a company must raise through share issuance before legally allocating those shares.
Step 2: Legal Mandate
SEBI regulations stipulate that a minimum of 90% of the issued amount must be subscribed.
Step 3: Distinguishing from Related Terms
Allotment money represents a single payment installment.
Subscribed capital denotes the total amount applied for.
Option (B) accurately states the requirement for allotment.

The minimum amount of capital which must be subscribed by the public before allotment is called:

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The Correct Option is B

Solution and Explanation

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