Question : There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the prop rite option from the options given below
(A) Both Assertion (A) and Reason (R) are true, but Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is false, but Reason ( R ) is true.
(D) Assertion (A) is true, but Reason (R) is false.
Question:
Assertion (A): A company must receive a minimum subscription on the public issue of shares
Reason (R): In default to receive a minimum subscription, the company could not allot its shares
Option 1: A
Option 2: B
Option 3: C
Option 4: D
Correct Answer: A
Solution : Answer = (A) Both Assertion (A) and Reason (R) are true, but Reason (R) is the correct explanation of Assertion (A).
Assertion (A) is true because according to company law, a company must receive the minimum subscription amount as specified in the prospectus to proceed with the allotment of shares. Reason (R) is also true because if a company fails to receive the minimum subscription, it cannot allot shares as it would not meet the legal requirement for issuing shares. Thus, Reason (R) explains why Assertion (A) is true.
Hence, the correct option is 1.