Which of the following statements are true in case of a corporation?

(A) Memorandum of Association is also known as statement in Lieu of Prospectus.
(B) Paid up capital can exceed called up capital.
(C) Capital Reserves are created from capital profits.
(D) The part of capital which can be called up only on winding up of the company is called Reserve Capital.
(E) Minimum subscription must be at least 90% of the shares issued.

Choose the correct answer from the options given below.

(C), (D) and (E) only

The correct answer is Option (1) → (C), (D) and (E) only.

(A) Memorandum of Association is also known as statement in Lieu of Prospectus.- This statement is incorrect. The Memorandum of Association is a document that contains the fundamental conditions upon which a company is allowed to operate. On the other hand, a statement in lieu of prospectus is a document filed with the Registrar of Companies when a company does not issue a prospectus prior to commencing business.

(B) Paid up capital can exceed called up capital.- This statement is false. Paid-up capital is the actual amount of capital for which shareholders have made payment, and it can not exceed the called-up capital, which is the amount that the company called upon the shareholders. Paid up capital is that portion of the called-up capital which has been actually received from the shareholders. When the shareholders have paid all the called amount, the called-up capital is the same to the paid-up capital. If any of the shareholders has not paid amount on calls, such an amount may be called as ‘calls in arrears’. Therefore, paid-up capital is equal to the called-up capital minus call-in arrears.

(C) Capital Reserves are created from capital profits.- This statement is true. Capital reserves are usually created from profits that are not distributable as dividends. These reserves may come from sources other than revenue profits, such as the sale of assets or revaluation of assets.

(D) The part of capital which can be called up only on winding up of the company is called Reserve Capital.- This statement is true. Reserve Capital is that part of the company's authorized share capital that can only be called up in the event of the company's winding up. It serves as a security for creditors.

(E) Minimum subscription must be at least 90% of the shares issued.- This statement is true. The company is required to attain a minimum subscription within 120 days from the issuance of the prospectus. If this requirement is not met within the specified time frame, the company cannot proceed with the allotment of shares, and it must refund the application money within 130 days from the prospectus issuance date. It's important to note that as per SEBI (Disclosure and Investor Protection) Guidelines, 2000 [6.3.8.1 and 6.3.8.2], the minimum subscription of capital cannot be less than 90% of the total amount offered.