Under section 39 of the Companies Act, 2013 read with rule 11 of the Companies (Prospectus and…

Under section 39(3) of the Companies Act, 2013 (formerly s.69 of the Companies Act, 1956), if the stated minimum amount has not been subscribed and the sum payable on application is not received within thirty days from the date of issue of the prospectus, or such other period as SEBI may specify, the application money must be returned within the prescribed time and manner. Rule 11(1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires repayment within fifteen days from the closure of the issue, failing which the directors of the company who are officers in default become jointly and severally liable to repay the money with interest at fifteen per cent per annum; under rule 11(2) the refund may be credited only to the bank account from which the subscription was remitted. Neither the underwriters nor the shareholders bear this statutory liability.