Question

Assertion (A): A company cannot make allotment of shares unless minimum subscription is received.

Reason (R): As per SEBI Guidelines minimum subscription has been fixed at 90% of the issued amount.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are correct and (R) is the correct reason of (A).

Explanation:

Assertion (A) is true, A company cannot allot shares unless it receives the minimum subscription required.

Reason (R) is also true, According to SEBI Guidelines, the minimum subscription is 90% of the issued amount.