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CS Executive · Capital Market and Securities Laws · Issue and Listing of Non-Convertible Securities

Sundaram Infra Ltd, a public company, wants to raise funds by issuing debentures. Under the Companies Act, 2013, which route is open to it for issuing securities to the public at large?

A public company offers securities to the public at large through a prospectus, which is called a public offer. Private placement is limited to a select group and cannot be advertised, while rights and bonus issues are made only to existing shareholders.

  1. AIssuing a prospectus, which is a public offerCorrect
  2. BSending a private placement offer-cum-application to the public through newspaper advertisements
  3. CUsing a rights issue to invite any member of the public
  4. DUsing a bonus issue to raise fresh funds from the public

Explanation

Section 23(1)(a) allows a public company to issue securities to the public through a prospectus, termed a public offer. Private placement is restricted to identified persons and bars public advertisements. Rights and bonus issues are directed only at existing members, not the public.

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