When an entity issues shares,until such time as the shares are allotted,the amount received must be held in trust.It remains in trust (refer s.722 of the Corporations Act)until:
A) so directed by ASIC.
B) the shares are issued or transferred; or the money is returned to the applicants.
C) options are issued over the shares.
D) the Board of Directors indicate that the received monies are required by the entity.

Question

Quizplus · Accepted Answer

According to s.722 of the Corporations Act, the amount received for shares must be held in trust until the shares are issued or transferred or the money is returned to the applicants. Options being issued over the shares or the Board of Directors indicating that the received monies are required by the entity are not mentioned as reasons for the release of the funds from trust. ASIC may have regulatory oversight but does not direct the release of funds from trust in this scenario. Hence, option B is the best choice.

When an Entity Issues Shares,until Such Time as the Shares