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CS Executive · Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Aarav Textiles Ltd. plans to raise money from the public by issuing a prospectus. SEBI believes investors need protection. Under Section 11A of the SEBI Act, 1992, which step is SEBI empowered to take by general or special orders?

SEBI may, by general or special orders, prohibit a company from issuing a prospectus, offer document or advertisement soliciting public money for securities, or lay down conditions for issuing them. Section 11A does not extend to appointing auditors, fixing dividends or nominating directors.

  1. AProhibit the company from issuing the prospectus, offer document or advertisement soliciting money for securitiesCorrect
  2. BAppoint the company's statutory auditor for the issue
  3. CFix the dividend rate on the shares to be issued
  4. DNominate directors on the company's Board for the issue

Explanation

Section 11A(1)(b) allows the Board, by general or special orders, to prohibit any company from issuing a prospectus, offer document or advertisement soliciting money from the public for securities, or to specify conditions for issuing them. Appointing auditors, fixing dividends or nominating directors is not conferred by this section.

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