According to the Companies Act, 2013 and SEBI regulations, when a company issues shares for public subscription, the minimum application money must be at least 5% of the face value of the share.
This means if a company issues shares with a face value of ₹10, the minimum amount to be collected at the application stage would be:
Application Money = 5% of ₹10 = ₹0.50 per share
This requirement ensures that applicants show genuine interest by paying a minimum amount upfront, while also preventing companies from collecting excessive amounts at the application stage that might burden investors if their applications are rejected.
The remaining amount (95% or less, depending on how much is collected at application) is collected in subsequent stages like allotment, first call, second call, and final call as per the company's payment schedule.
Correct Answer: Option 2 (5%)