3 Most VSAQ’s of Commencement of Business Chapter in Inter 1st Year Commerce (TS/AP)

2 Marks

VSAQ-1 : What is Minimum subscription? (OR) Define Minimum Subscription.

Minimum subscription is the minimum amount of capital that a public company must raise from the public through the sale of its shares before it can proceed with the allotment of those shares. In many jurisdictions, including India, the minimum subscription requirement is typically set at 90% of the total issued capital. This means that the company must receive subscriptions for at least 90% of the shares it has offered for public purchase. If the company fails to meet this minimum subscription threshold within a specified period, it is generally required to refund the entire amount of money received from subscribers and cannot proceed with the allotment of shares until the minimum subscription is met.

VSAQ-2 : What is certificate of commencement of business?

A certificate of commencement of business is an official document issued to a public limited company by the registrar of companies. It signifies that the company has met all legal requirements and can officially start its operations, including contracts and fundraising, after receiving the minimum required capital subscription as mentioned in its prospectus.

VSAQ-3 : Memorandum of Association. (OR) Define MOA. (OR) Define Memorandum of Association.

The Memorandum of Association (MOA) is a crucial document that must be submitted to the registrar of companies during the incorporation of a company. It serves as the company’s constitution and outlines its fundamental objectives, scope of operations, and the relationship between the company and its shareholders. In the case of a public limited company, at least seven members must sign the MOA, while for a private limited company, two members are required to sign it.