Minimum subscription is the minimum amount that, in the opinion of directors, must be raised to meet the needs of business operations of the company relating to:
(A) The price of any property purchased, or to be purchased, which has to be met wholly or partly out of the proceeds of issue;
(B) Preliminary expenses payable by the company and any commission payable in connection with the issue of shares;
(C) Working capital;
(D) Any other expenditure required for the usual conduct of business operations
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B), (C) and (D)
Minimum subscription is the least amount the directors must raise before they can allot shares. It is fixed by looking at what the business needs the issue money for, so every one of the listed needs is part of it.
(A) The price of any property purchased, or to be purchased, which has to be met wholly or partly out of the proceeds of issue Correct. The price of property bought, or to be bought, out of the issue proceeds is part of it.
(B) Preliminary expenses payable by the company and any commission payable in connection with the issue of shares Correct. Preliminary expenses and commission on the issue of shares must be met from the money raised.
(C) Working capital Correct. Working capital is needed to run the business from day one.
(D) Any other expenditure required for the usual conduct of business operations Correct. Any other expenditure needed for the usual conduct of business operations is included too.
The full list also covers the repayment of money borrowed for the first two purposes; the question leaves that item out, which does not change the answer.
NCERT (2026-27 edition):
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