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CS Executive · Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Under Section 11A of the SEBI Act, 1992, Kaveri Foods Ltd proposes to issue an advertisement soliciting money from the public for its securities. Which statement is correct about SEBI's powers?

SEBI can by general or special orders prohibit the company from issuing the advertisement soliciting money, or allow it subject to specified conditions. Section 11A covers prospectus, offer document and advertisement, so SEBI's power is not limited to a prospectus or to recommendations.

  1. ASEBI can, by general or special orders, prohibit the company from issuing the advertisement, or specify conditions subject to which it may be issuedCorrect
  2. BSEBI can only recommend changes and has no power to prohibit any advertisement
  3. CSEBI's power applies only to prospectus and not to advertisements
  4. DSEBI may act only after the company has been delisted

Explanation

Section 11A(1)(b) empowers the Board by general or special orders to prohibit any company from issuing a prospectus, offer document or advertisement soliciting money for securities, or to specify conditions if not prohibited. The option limiting it to prospectus ignores the word advertisement in the section.

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