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

Under section 378G, a Producer Company's articles must deal with the sources and limits of its funds. Which option correctly describes what the articles must contain on this?

The articles must state the amount of reserves, the sources from which funds may be raised, limitations on raising funds, restrictions on their use, and the extent of debt that may be contracted along with its conditions. Partial or unlimited fund-raising statements do not satisfy section 378G(3)(j).

  1. AOnly the amount of authorised share capital
  2. BThe amount of reserves, sources from which funds may be raised, limitation on raising of funds, restriction on use of such funds and the extent of debt that may be contracted and its conditionsCorrect
  3. COnly the extent of debt, with no reference to reserves
  4. DA statement that funds can be raised without any limitation

Explanation

Section 378G(3)(j) requires the articles to specify the amount of reserves, sources of funds, limitation on raising funds, restriction on the use of such funds, and the extent of debt and conditions. Stating only share capital or only debt is incomplete, and having no limitation contradicts the requirement for a stated limitation.

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