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

Kaveri Textiles Ltd proposes an offer document soliciting money from the public for new securities. SEBI is concerned that the company's draft advertisement is misleading. Under Section 11A of the SEBI Act, 1992, what can SEBI do by general or special orders?

SEBI may, by general or special orders, prohibit the company from issuing the prospectus, offer document or advertisement soliciting public money, or it may specify conditions under which such a document may be issued. This power comes from Section 11A of the SEBI Act.

  1. AProhibit the company from issuing the prospectus, offer document or advertisement, or specify conditions subject to which it may be issuedCorrect
  2. BOnly recommend changes to the company, with no power to prohibit
  3. CCancel the company's incorporation with the Registrar
  4. DFix the issue price of the securities directly

Explanation

Section 11A(1)(b) allows SEBI by general or special orders to prohibit a company from issuing a prospectus, offer document or advertisement soliciting money from the public, or to specify conditions for issuing it if not prohibited. It does not extend to cancelling incorporation or fixing the price.

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