There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below-
Assertion: The company has to get a minimum subscription within 120 days from the date of the issue of the prospectus.
Reasoning: If the company fails to receive the minimum subscription, the company can proceed with the allotment of shares and application money only after 130 days of the date of issue of prospectus.
Answer & explanation
Correct answer: option 3
When prospectus is issued to the public, prospective investors intending to subscribe the share capital of the company would make an application along with the application money and deposit the same with a scheduled bank as specified in the prospectus. The company has to get minimum subscription within 120 days from the date of the issue of the prospectus. If the company fails to receive the same within the said period, the company cannot proceed for the allotment of shares and application money should be returned within 130 days of the date of issue of prospectus.