Definition of Minimum Subscription

Minimum subscription refers to the minimum number of shares that a company needs to get out of the entire issue by the date of closure. Currently, every company is required to raise 90% of the issues amount. Else, the company is required to refund the complete amount that has been received. The mentioned 90% has to be the cheques which are not cleared.

Points to remember:

• The infrastructure companies that have a public issue, for them 90% of minimum subscription is not compulsory and is to be given by an alternative source through which the fund will be available to the company.
• A legal precedent for Minimum Subscription was created under the Companies Act of 1956. It states that the company is allowed to offer only a certain amount of shares to the public, for which the company can actually pay.