Practicing Success
What is the consequence if the company fails to receive the minimum subscription within the specified period? |
The company must refund one half of application money immediately The company can proceed with the allotment of shares regardless The company must extend the subscription period indefinitely The company cannot proceed with the allotment of shares and must return application money |
The company cannot proceed with the allotment of shares and must return application money |
The company has to get a minimum subscription within 120 days from the date of issuing the prospectus. If the company fails to receive the minimum subscription within this specified period, it cannot proceed with the allotment of shares. This means that the company cannot distribute or allocate shares to the applicants. Instead, it is required to return the application money to the prospective investors within 130 days of the date of issue of prospectus. This provision ensures that investors' funds are protected and returned promptly if the company does not achieve the minimum level of interest or funding needed to proceed with its share issuance plans. |