Skip to content

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

Sagar Textiles Ltd, a company with a share capital, proposes to increase its subscribed capital by a rights issue to existing equity shareholders under section 62(1)(a). Which statement about the offer notice is correct?

The rights offer notice must state the number of shares offered and give a time of not less than fifteen days (or a lesser prescribed number) and not more than thirty days from the date of offer, after which unaccepted shares are deemed declined.

  1. AThe notice must allow acceptance for a period of at least 15 days (or such lesser period as is prescribed) and not more than 30 days from the date of the offerCorrect
  2. BThe notice must allow exactly 60 days for acceptance
  3. CThe notice may allow any period the Board decides, including 3 days
  4. DThe notice need not state the number of shares offered

Explanation

Section 62(1)(a)(i) requires the notice to specify the number of shares offered and to limit a time of not less than fifteen days (or such lesser number of days as may be prescribed) and not more than thirty days from the date of offer. Fixed 60 days or any period chosen by the Board does not fit this rule.

Did you get it right without looking?

One question tells you little. A timed set on Raising of Funds from Equity and Procedural Aspects - Public Funding shows your real accuracy, how long you take and where you lose marks.

Practise Raising of Funds from Equity and Procedural Aspects - Public FundingFree diagnostic mock

More Raising of Funds from Equity and Procedural Aspects - Public Funding questions