16 
SECRETARIAL PRACTICE 
minimum subscription as a condition precedent to allotment 
and in. insisting that a company should not commence 
business unless shares held subject to the payment of the 
whole amount thereof in cash had been allotted to an amount 
not less than the minimum subscription was presumably to 
ensure that a company should have adequate means for its 
intended operations; but as under that Act the minimum 
subscription could be fixed at seven shares, that object was not 
necessarily attained. The Companies Act, 1928 (see s. 35), 
altered the law in this respect and now (under s. 39 of the 
Companies Act, 1929), before any allotment is made of any 
share capital offered to the public for subscription there 
must have been subscribed— 
(a) the amount stated in the prospectus as the minimum 
amount which in the opinion of the directors must be 
raised by the issue of share capital to provide for 
(i) the purchase price of any property purchased or 
to be purchased which is to be defrayed in whole 
or in part out of the proceeds of the issue. 
(ii) any preliminary expenses or underwriting com- 
mission payable by the company. 
(iii) the repayment of any moneys borrowed by the 
company in respect of any of the foregoing 
matters, and 
(iv) working capital, 
and (b) the sum payable on application for the amount so stated 
must have been paid to and received by the company. 
The amount so stated must be reckoned exclusively 
of any amount payable otherwise than in cash, and 
is referred to in the Act as the minimum subscription. 
Under the old law a sum paid by cheque could not be 
treated as paid to and received by the company until 
the cheque had been cleared [Mears v. Western Canada 
Co. (1905), 2 Ch. 353], but under s. 39 a sum is to be 
deemed to have been paid to and received by the 
Company if a cheque for that sum has been received by 
the Company in good faith and the directors have no 
reason for suspecting that the cheque will not be paid. 
The amount payable on application in respect of each 
share must not be less than five per cent. of the nominal 
amount of the share. 
5. The allotment having been made, every director must, 
unless he has already done so, pay to the company on each 
of the shares taken or contracted to be taken by him, and for