Prospectus — SPCC STD 11 Commerce — Question

Importance of Minimum Subscription:
(1) For securing interest of Investor : In order to secure the interest of the investors the provisions of Minimum Subscription is made in the Companies Act.
(2) For distribution of Securities : A company can distribute its securities only when the amount of minimum subscription is received.
(3) Save the investors from the loss : Some dishonest or inexperienced directors establish a company with insufficient capital. As a resultant effect business can not run in a systematic manner and the investors have to lose their invested money.
(4) Guidelines of SEBI : To receive minimum amount on share time limit is prescribed by the SEBI and if a company is not able to received minimum Subscription in that particular time limit then such amount is required to be returned as per the directions of the SEBI.
(5) Liability of officers in case of violation of Law: The concerned officers are liable to pay fine on violation of provisions of Companies Act. So, the investors feel safety of their money.
(6) Registered with company Registrar : The hares allotted to the investors are registered with the registrar of Companies. So the problemof fack allotment does not arise.
(7) Increase the trust of investors : Minimum Subscription makes sure that the company is going to establish. Thus, investors feel trust to invest their money in the company.