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CS Executive · Capital Market and Securities Laws · Listing Obligations and Disclosure Requirements

Under Section 17A(3) of the SCRA, listing permission for a public offer was refused by the recognised stock exchange. The issuer repays the applicants only after the eighth day has passed. What is the consequence for the issuer and its directors or trustees in default?

The issuer and every director or trustee in default become jointly and severally liable to repay the money with interest at fifteen per cent per annum, running from the expiry of the eighth day after the liability to repay arose, under Section 17A(3) of the SCRA.

  1. AThey are jointly and severally liable to repay the money with interest at fifteen per cent per annum from the expiry of the eighth dayCorrect
  2. BThey are liable to repay only the principal, without interest, since the refusal was by the exchange
  3. CThey are liable to pay interest at twelve per cent per annum from the date of application money receipt
  4. DOnly the issuer is liable, and the directors are exempt from personal liability

Explanation

Section 17A(3) makes the issuer and every director or trustee in default jointly and severally liable to repay with interest at 15% per annum on and from the expiry of the eighth day. Interest runs from the eighth day, not from receipt, and directors are not exempt.

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