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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Equity and Procedural Aspects - Public Funding

Meera Foods Ltd made a rights offer. Its articles are silent on renunciation. Shareholder Ramesh does not wish to subscribe. What is the position under Section 62(1)(a)(ii)?

Unless the articles provide otherwise, a rights offer is deemed to include the right to renounce the shares offered in favour of any other person, and the notice must contain a statement of that right. Silent articles therefore leave Ramesh free to renounce.

  1. AThe offer is deemed to include a right to renounce the shares in favour of any other person, and the notice must state this rightCorrect
  2. BRamesh cannot renounce and the shares lapse immediately
  3. CRamesh may renounce only in favour of existing directors
  4. DRenunciation is allowed only with prior Tribunal approval

Explanation

Unless the articles provide otherwise, the offer is deemed to include a right to renounce the shares offered in favour of any other person, and the notice must contain a statement of this right. Since the articles are silent, renunciation is available.

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