Updated on March 9, 2023
When a company wants to launch an IPO to raise funds, it is bound by certain rules and regulations as per the provisions of The Companies Act, 2013. One such rule talks about the minimum subscription to be met by the company for the IPO’s validity.
As per SEBI guidelines, it is mandatory for a company to have at least 90% of the shares subscribed in an IPO till the date of its closure. If the company fails to get the minimum subscription, it will have to refund the entire application money received under the IPO.
Other important details on minimum subscription
a. In case the minimum subscription requirement is not met, the application amount will have to be refunded within 15 days from the closure of the issue.
b. The provisions of minimum subscription will apply on both debt and equity issues.
c. If there is a delay in the issue of a refund in case of under-subscription of the IPO, the applicants are eligible to get interest on their amount due at the rate of 15% p.a.
d. Any company and every officer in default that fails to comply with these procedures will be liable to pay a fine of Rs. 1,000 per day of the default and the maximum penalty cannot exceed Rs. 1,00,000.