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Question
Apple Orchards Ltd. issued 2,00,000 Equity Shares of ₹ 10 each at par payable ₹ 4 on application, ₹ 3 on allotment and balance as first and final call. It received ₹ 6,80,000 as Application Money.
The amount that it should receive on Allotment will be
Options
₹ 6,00,000.
₹ 5,10,000.
₹ 5,55,000.
₹ Nil.
MCQ
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Solution
₹ Nil.
Explanation:
A company cannot proceed with the allotment unless it has received a minimum subscription of 90% of the outstanding shares, per SEBI norms. Since the firm only received an 85% subscription, it is legally unable to issue any shares and is required to reimburse the applicants for their full application fee. No money will be called or received on allotment since no shares are allotted.
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