Gujarat BoardEnglish MediumSTD 11 CommerceSPCCProspectus3 Marks
Question
Explain the importance of Minimum Subscription.
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Answer
The significance of the minimum payment is as follows:
To protect the interest of investors, a minimum provision has been made in the Companies Act.
Shares or other securities can be allotted only if the minimum payment amount is received.
Some dishonest or inexperienced managers set up a company with insufficient capital.
As a result, the business cannot be run properly and the money invested by the public investors who invest in it has to be lost.
Hence the provision of minimum payment is mandatory in law.
According to the Companies Act, 2013, if the minimum payment amount is not received within 30 days from the date of issue of the advertisement or within the period specified by SEBI, the amount has to be refunded as directed by SEBI.
If this rule is violated, the responsible officials will be punished.
This has to be registered with the Registrar of Companies when the shares are allotted.
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