While issuing the share capital for public subscription, what is the minimum percentage of face value that should be received on application money?

5%

The correct answer is Option (1) - 5%.

Application money should be at least 5% of the face value of the share. For e.g. if a share having face value of ₹100 is issued then minimum ₹5 must be collected by the company on application.

The following points should be kept in mind while issuing the share capital for public subscription :

• The application money should be at least 5% of the face value of the share.
• Calls are to be made as per the provisions of the articles of association.
• Where there is no articles of association of its own, the following provisions of Table A will apply:
  (a) A period of one month must elapse between two calls;
  (b) The amount of call should not exceed 25% of the face value of the share; 2022-23 Accounting for Share Capital 13
  (c) A minimum of 14 days’ notice is given to the shareholders to pay the amount; and
  (d) Calls must be made on a uniform basis on all shares within the same class.
• The procedure for accounting for the issue of both equity and preference shares is the same. To differentiate between the two the words ‘Equity’ and ‘Preference’ is prefixed to each and every instalment