As per the Companies Act, 2013, a company must receive the minimum subscription within 120 days from the date of opening of the subscription list (issue of prospectus).
Minimum Subscription refers to at least 90% of the issued amount stated in the prospectus.
If the company fails to receive the minimum subscription within 120 days, the amount already received from applicants must be refunded within 15 days. If not refunded within this period, the company and its directors become liable to repay the amount with interest at 15% per annum from the expiry of the 8-day period.
This provision protects public investors by ensuring that a company cannot proceed with insufficient capital, which could jeopardize the business operations and investor interests.