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CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Private Funding

Orion Pharma Ltd, an unlisted public company, made a private placement offer to identified persons and has not yet finished allotment. Which action by the company is consistent with section 42 of the Companies Act, 2013?

A fresh private placement offer can be made only after allotments under the earlier offer are completed, or that offer has been withdrawn or abandoned. Using the money before the return of allotment is filed, or marketing to the public, is prohibited.

  1. AMaking a fresh offer to a different group while the first allotment is pending and not withdrawn
  2. BUsing the application money for working capital before filing the return of allotment, if allotment is made
  3. CMaking a fresh offer only after allotments under the earlier offer are completed or that offer is withdrawn or abandonedCorrect
  4. DAppointing agents to canvass the issue among the public to reach the identified persons quickly

Explanation

Section 42(5) bars a fresh offer until allotments under the earlier offer are completed or the offer is withdrawn or abandoned. Money cannot be used until allotment is made and the return is filed with the Registrar, and section 42(7) bars agents or marketing channels to inform the public at large.

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