law: Companies Act, 1956
  Sec 69    -    
  
  Prohibition of allotment unless minimum subscription received. 
  (1) No allotment shall be made of any share
  
  capital of a company offered to the public for subscription, unless the amount
  
  stated in the prospectus as the minimum amount which, in the opinion of the
  
  Board of directors, must be raised by the issue of share capital in order to
  
  provide for the matters specified in clause 5 of Schedule II has been
  
  subscribed, and the sum payable on application for the amount so stated has
  
  been paid to and received by the company, whether in cash or by a cheque or
  
  other instrument which has been paid.
  (2) The amount so stated in the prospectus
  
  shall be reckoned exclusively of any amount payable otherwise than in money,
  
  and is in this Act referred to as " the minimum subscription ".
  (3) The amount payable on application on each
  
  share shall not be less than five per cent of the nominal amount of the share.
  (4) All moneys received from applicants for
  
  shares shall be deposited and kept deposited in a Scheduled Bank : 
  (a) until the certificate to commence business
  
  is obtained under section 149, or
  (b) where such certificate has already been
  
  obtained, until the entire amount payable on applications for shares in respect
  
  of the minimum subscription has been received by the company, and where such
  
  amount has not been received by the company within the time on the expiry of
  
  which the moneys received from the applicants for shares are required to be
  
  repaid without interest under sub-section (5), all moneys received from
  
  applicants for shares shall be returned in accordance with the provisions of
  
  that sub-section. In the event of any contravention of the provisions of this
  
  sub-section, every promoter, director or other person who is knowingly
  
  responsible for such contravention shall be punishable with fine which may
  
  extend to fifty thousand rupees.
  (5) If the conditions aforesaid have not been
  
  complied with on the expiry of one hundred and twenty days after the first
  
  issue of the prospectus, all moneys received from applicants for shares shall
  
  be forthwith repaid to them without interest ; and if any such money is not so
  
  repaid within one hundred and thirty days after the issue of the prospectus,
  
  the directors of the company shall be jointly and severally liable to repay
  
  that money with interest at the rate of six per cent per annum from the expiry
  
  of the one hundred and thirtieth day :
  Provided  that a director shall not be so liable
  
  if he proves that the default in the repayment of the money was not due to any
  
  misconduct or negligence on his part.
  (6) Any condition purporting to require or
  
  bind any applicant for shares to waive compliance with any requirement of this
  
  section shall be void.
  (7) This section, except sub-section (3)
  
  thereof, shall not apply in relation to any allotment of shares subsequent to
  
  the first allotment of shares offered to the public for subscription.