Question

Assertion (A): In case the company fails to receive minimum subscription, it cannot proceed for the allotment of shares.

Reason (R): When the company fails to receive minimum subscription it has to return the application money within 120 days from the date of issue of prospectus.

In the context of the above two statements which of the following is correct:

Options

• Both (A) and (R) are correct.

• (A) is correct but (R) is incorrect.

• Both (A) and (R) are incorrect.

• (A) is incorrect but (R) is correct.

Answer 1

(A) is correct but (R) is incorrect.

Explanation:

Reason (R) is incorrect because the application needs to be sent back within 130 days of the prospectus being released.