The minimum application money, as per the Companies Act 2013, is 5% of the nominal value of the shares.
Application money is the sum a company receives from potential investors when they apply for newly issued shares. This amount ensures that applicants are serious about their intention to purchase the shares. Once the application money is received, the company can then proceed with the allotment process, where shares are officially assigned to the shareholders.
Here's a breakdown:
- Nominal Value (Face Value): This is the stated value of a share as determined by the company's charter.
- Application Money: The upfront payment required when applying for shares.
Example:
Let's say a company issues shares with a nominal value of ₹100 each. The minimum application money required would be:
5% of ₹100 = ₹5
Therefore, an applicant would need to pay at least ₹5 per share when applying.
