New 55% Off on All Courses - Enroll Now! Click Here

    Question

    As per Recent Guidelines of SEBI, If a company has not

    identified acquisition or investment target as objects in the DRHP (Draft Red Herring Prospectus) and the offer document, then the amount for such objects cannot exceed…………….?
    A 25% of the amount raised Correct Answer Incorrect Answer
    B 35% of the amount raised Correct Answer Incorrect Answer
    C 20% of the amount raised Correct Answer Incorrect Answer
    D 15% of the amount raised Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    In December 2021, The Securities and Exchange Board of India (SEBI) cleared a slew of amendments to various regulations and tightened the rules for initial public offerings (IPOs). If a company has not identified acquisition or investment targets as objects in the DRHP and the offer document, then the amount for such objects cannot exceed 25 percent of the amount being raised. Also, If a company in its Draft Red Herring Prospectus (DRHP) sets out an object for future inorganic growth but does not identify any acquisition or investment target, then the amount for such objects and amount for general corporate purpose cannot exceed 35 percent of the total amount being raised, the regulator said "Above limits shall not apply if the proposed acquisition or strategic investment object has been identified and suitable specific disclosures about such acquisitions or investments are made in the draft offer document and the offer document at the time of filing of offer documents," SEBI said. 

    Practice Next