69. Prohibition of
allotment unless minimum subscription received.— (1)
No allotment shall be made of any share capital of a company
offered to the public for subscription, unless the amount
stated in the prospectus as the minimum amount which, in the
opinion of the Board of directors, must be raised by the issue
of share capital in order to provide for the matters specified
in clause 5 of Schedule II has been subscribed, and the sum
payable on application for the amount so stated has been paid
to and received by the company, whether in case or by a cheque
or other instrument which has been paid.
(2) The amount so stated in the prospectus shall be reckoned
exclusively of any amount payable otherwise than in money,
and is in this Act referred to as “the minimum subscription”.
(3) The amount payable on application on each share shall
not be less than five per cent of the nominal amount of the
share.
(4) All moneys received from applicants for shares shall
be deposited and kept deposited in a Scheduled Bank—
(a) until the certificate to commence business is obtained
under section 149, or
(b) where such certificate has already been obtained, until
the entire amount payable on applications for shares in respect
of the minimum subscription has been received by the company,
and where such amount has not been received by the company
within the time or the expiry of which the moneys received
from the applicants for shares are required to be repaid without
interest under sub-section (5), all moneys received from applicants
for shares shall be returned in accordance with the provisions
of that sub-section.
In the event of any contravention of the provisions of this
sub-section, every promoter, director or other person who
is knowingly responsible for such contravention shall be punishable
with fine which may extend to fifty thousand rupees.
(5) If the conditions aforesaid have not been complied with
on the expiry of one hundred and twenty days after the first
issue of the prospectus, all moneys received from applicants
for shares shall be forthwith repaid to them without interest;
and if any such money is not so repaid within one hundred
and thirty days after the issue of the prospectus, the directors
of the company shall be jointly and severally liable to repay
that money with interest at the rate of six per cent. per
annum from the expiry of the one hundred and thirtieth day:
Provided that a director shall not be so liable if he proves
that the default in the repayment of the money was not due
to any misconduct or negligence on his part.
(6) Any condition purporting to require or bind any applicant
for shares to waive compliance with any requirement of this
section shall be void.
(7) This section, except sub-section (3) thereof, shall not
apply in relation to any allotment of shares subsequent to
the first allotment of shares offered to the public for subscription.
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