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CS Executive · Company Law and Practice · Legal Status and Types of Registered Companies

Meera Public Limited is an unlisted public company. Its board proposes three ways of issuing securities: (i) a prospectus-based public offer, (ii) private placement, (iii) a bonus issue. Under section 23 of the Companies Act, 2013, which statement is correct?

A public company may issue securities by public offer through a prospectus, by private placement, or by rights or bonus issue, each in compliance with the relevant provisions. Section 23(1) lists all three routes, so all of the board's proposals are permitted.

  1. AOnly (i) is permitted for a public company
  2. B(i) and (ii) are permitted, but a bonus issue is not
  3. CAll three are permitted, each by complying with the relevant provisionsCorrect
  4. DOnly (ii) and (iii) are permitted, since it is unlisted

Explanation

Section 23(1) lets a public company issue securities through a public offer by prospectus, through private placement under Part II, or through a rights or bonus issue in accordance with the Act. Listing status does not restrict these routes. Hence all three are available.

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