According to SEBI (Securities and Exchange Board of India) guidelines and the Companies Act provisions, when a company issues shares to the public, the minimum application money that must be collected is 5% of the face value of the shares.
Illustration:
If a company issues shares with a face value of ₹100, the minimum application money = 5% of ₹100 = ₹5
This requirement ensures that applicants demonstrate genuine interest in subscribing to the shares and helps reduce speculative or frivolous applications. The remaining amount can be collected through allotment money and call money as per the company's payment schedule.
Correct Option: 3 (5%)