CAF-4 · Chapter 17 · Question 10 of 12
Upon incorporation, three founding members of a private limited company signed the Memorandum of Association, undertaking to purchase 10,000 shares each at Rs. 10. What is the legal status of this undertaking?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The amount of Rs. 100,000 each becomes a debt due from them to the company, payable in the time/manner notified by the Commission.
Explanation
The money payable by subscribers of the memorandum for their shares becomes a legal debt due from them to the company, payable according to the Commission's notifications.
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