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

According to the Securities and Exchange Board of India (SEBI) guidelines, the minimum subscription requirement refers to the minimum percentage of the issued capital that must be subscribed by the public in an initial public offering or rights issue. This minimum percentage is set at 90%. If the company fails to receive applications for at least 90% of the issued capital, the issue is considered a failure, and the company must refund the money received from applicants.

Capital Type	Description
Authorised Capital	The maximum capital a company is authorized to issue by its constitutional documents.
Issued Capital	The portion of the authorised capital that is offered to investors for subscription.
Reserve Capital	The part of the uncalled capital of a company's shares which can be called only in the event of the company's winding up.
Subscribed Capital	The portion of the issued capital subscribed by the public.

The correct answer is that the minimum subscription of capital cannot be less than 90% of the Issued capital.