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CS Executive · Capital Market and Securities Laws · Issue and Listing of Non-Convertible Securities

Bharat Rail Credit Ltd proposes a public issue of NCS. SEBI wants to ensure that a particular company does not solicit money through an advertisement for the issue. Under section 11A of the SEBI Act, 1992, what can SEBI do by general or special orders?

SEBI may prohibit a company from issuing a prospectus, offer document or advertisement soliciting money from the public for securities, or alternatively specify the conditions under which these may be issued. This power comes from section 11A(1)(b) of the SEBI Act, 1992, exercised for investor protection.

  1. AOnly specify the conditions, and never prohibit the issue
  2. BProhibit a company from issuing a prospectus, offer document or advertisement soliciting money, or specify conditions for issuing it if not prohibitedCorrect
  3. CProhibit only advertisements, but not a prospectus
  4. DAct only after the Central Government approves the order

Explanation

Section 11A(1)(b) lets SEBI, for investor protection, by general or special orders prohibit a company from issuing a prospectus, offer document or advertisement soliciting money for securities, or specify conditions subject to which they may be issued if not prohibited. It is not limited to conditions, nor to advertisements alone, and no Central Government approval is mentioned.

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