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

Sundaram Textiles Ltd sends a rights offer notice to its shareholders. Which statement about the offer period and renunciation is correct under section 62 of the Companies Act, 2013?

The rights offer must stay open for not less than fifteen days, or any lesser period prescribed, and not more than thirty days. Unless the articles provide otherwise, the offer includes a right to renounce, and the notice must state that right.

  1. AThe offer must remain open for at least thirty days and cannot exceed sixty days
  2. BThe offer must remain open for not less than fifteen days (or such lesser days as prescribed) and not more than thirty days, and the notice must state the right to renounce unless the articles provide otherwiseCorrect
  3. CThe offer may be kept open for any period chosen by the Board, and renunciation is never allowed
  4. DThe offer must be open for exactly seven days, and renunciation needs a court order

Explanation

Section 62(1)(a)(i) fixes a window of not less than fifteen days (or lesser number as prescribed) and not more than thirty days. Clause (ii) deems the offer to include a right to renounce unless the articles say otherwise, and the notice must state it.

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