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CS Executive · Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Vardhan Textiles Ltd made a public issue. The stated minimum amount was not subscribed, and the application sums were not received within thirty days from the date of issue of the prospectus (no other period specified by SEBI). What must the company do?

The company must return the amount received within the time and manner prescribed, because the stated minimum was not subscribed and the application sum was not received within thirty days of the prospectus date. It cannot retain the money, convert it into a loan or make a partial allotment.

  1. AKeep the money and allot after another 60 days
  2. BReturn the amount received within the time and manner prescribedCorrect
  3. CConvert the application money into a loan from subscribers
  4. DAllot shares only to the first fifty applicants

Explanation

Under Section 39(3), if the minimum amount has not been subscribed and the sum payable on application is not received within thirty days from the date of issue of the prospectus (or other period SEBI specifies), the amount received must be returned within the time and manner prescribed. Holding it for further time is not permitted.

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