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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

Arjun Finance Ltd is about to open a public issue of NCDs. Which statement about the form of securities is correct under the Companies Act, 2013?

Every company making a public offer must issue its securities only in dematerialised form, in compliance with the Depositories Act, 1996, under Section 29(1)(a). Investor preference or a small issue size does not create an exception, so the NCDs must be issued in demat form.

  1. ASecurities may be issued in physical form if investors request it
  2. BEvery company making a public offer must issue the securities only in dematerialised formCorrect
  3. COnly listed companies must issue in dematerialised form
  4. DDematerialised issue is optional for a public offer if the issue size is small

Explanation

Section 29(1)(a) requires every company making a public offer to issue securities only in dematerialised form under the Depositories Act, 1996. There is no exception for investor request or small issue size. Section 29(2) permits choice only for companies other than those in sub-section (1).

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