New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    Which of the following statements accurately describes

    the permissible methods for a private company to issue securities, considering the provisions of the Companies Act?
    A A private company may issue securities by way of rights issue or bonus issue, but only if it first conducts a public offer and complies with additional regulations Correct Answer Incorrect Answer
    B A private company is permitted to issue securities either through a rights issue or bonus issue, or through private placement, but must obtain prior approval from the independent director for each method Correct Answer Incorrect Answer
    C A private company can issue securities exclusively through a rights issue or bonus issue, or alternatively through private placement; however, it cannot use both methods simultaneously Correct Answer Incorrect Answer
    D A private company may issue securities by way of rights issue or bonus issue, or through private placement, but must adhere to distinct regulatory requirements for each method, including specific limits on the number of investors for private placement Correct Answer Incorrect Answer
    E A private company is allowed to issue securities through rights issue and bonus issue but is restricted from using private placement unless it meets additional criteria for public offer Correct Answer Incorrect Answer

    Solution

    (2) A private company may issue securities— (a) by way of rights issue or bonus issue in accordance with the provisions of this Act; or (b) through private placement by complying with the provisions of Part II of this Chapter.

    Practice Next