Question

The company has to get minimum subscription within ______ from the date of issue of the prospectus. When minimum subscription has been received, the directors of the company proceed to make ______ which implies a valid contract between the company and the applicants who now become the allottee and assume the status of shareholders or members.

Options

• 30 days, allotment of shares.

• 130 days, application of shares.

• 14 days, allotment of shares.

• 15 days, allotment of shares.

Answer 1

The company has to get minimum subscription within 30 days from the date of issue of the prospectus. When minimum subscription has been received, the directors of the company proceed to make allotment of shares which implies a valid contract between the company and the applicants who now become the allottee and assume the status of shareholders or members.

Explanation:

A firm must receive the minimum subscription within 30 days of releasing the prospectus, as required by Section 39(3) of the Companies Act of 2013; if not, all application fees must be returned to the applicants. Following receipt of the minimum subscription, the directors allocate shares, creating a legally binding agreement between the applicants and the business. As a result, the applicants are now officially shareholders.