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

Tarang Housing Ltd received application money for privately placed debentures on 1 March. It could not allot them within the statutory period. By when must it allot, and what happens if it fails to repay on time?

The company must allot within sixty days of receiving application money. If it cannot, it must repay within fifteen days after those sixty days, failing which it owes interest at twelve per cent per annum from the expiry of the sixtieth day.

  1. AAllot within 30 days; repay within 7 days, with interest at 6% if delayed
  2. BAllot within 60 days; repay within 15 days after that, failing which interest at 12% p.a. from the sixtieth dayCorrect
  3. CAllot within 90 days; repay within 30 days, with interest at 15% p.a.
  4. DAllot within 60 days; repay within 30 days, with interest at 12% p.a. from the date of receipt

Explanation

Section 42(6) requires allotment within sixty days of receipt of application money. Failing that, repayment must be made within fifteen days from the expiry of sixty days, else the company owes interest at twelve per cent per annum from the expiry of the sixtieth day, not from the date of receipt.

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