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    Question

    SEBI, recently in December 2021, came out with revised guidelines for IPOs under which it has limited the use of IPO proceeds for unidentified acquisitions and general corporate purposes is limited to _______   

    A 20% of amount raised Correct Answer Incorrect Answer
    B 25% of amount raised Correct Answer Incorrect Answer
    C 35% of amount raised Correct Answer Incorrect Answer
    D 50% of amount raised Correct Answer Incorrect Answer
    E IPO money cannot be used for unidentified acquisitions Correct Answer Incorrect Answer

    Solution

    If a company says in the offer document that it plans inorganic growth but has not identified any investment target, then the amount for this and general corporate purpose (GCP) should not exceed 35% of the total amount being raised. However, there will be no limits if the proposed acquisition is identified and specific disclosures about this are made in the offer document.

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