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

Meghdoot Foods Ltd, an unlisted company, plans to raise money by inviting subscription to its equity shares from the general public through a prospectus. Under Section 11A of the SEBI Act, 1992, which of the following can SEBI do for the protection of investors in relation to such an issue?

SEBI may specify by regulations the matters relating to issue of capital and transfer of securities, and the manner in which companies must disclose them. Section 11A does not let it fix the issue price, appoint directors or decide dividends.

  1. ASpecify by regulations the matters relating to issue of capital and the manner in which they are to be disclosed by companiesCorrect
  2. BFix the price at which the company must issue its shares to the public
  3. CAppoint the directors who will manage the proceeds of the issue
  4. DDecide the dividend the company must pay on the shares issued

Explanation

Section 11A(1)(a) empowers SEBI to specify by regulations the matters relating to issue of capital, transfer of securities and incidental matters, and the manner in which companies disclose them. The Section does not give SEBI power to fix issue price, appoint directors or decide dividends, so those options are wrong.

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