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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

Under the Companies Act, 2013, what does section 390 empower the Central Government to do regarding Indian Depository Receipts?

The Central Government may make rules on the offer of IDRs, prospectus disclosures, dealing in depository mode by custodians and underwriters, and sale, transfer or transmission. Section 390 of the Companies Act, 2013 grants this power and does not require the foreign company to have a place of business in India.

  1. AMake rules on the offer of IDRs, disclosures in the prospectus, dealing in depository mode, and sale, transfer or transmissionCorrect
  2. BFix the price at which IDRs must be offered to the public
  3. CGrant IDR holders voting rights in all Indian companies
  4. DRequire every foreign company to establish a place of business in India before offering IDRs

Explanation

Section 390 lets the Central Government make rules for the offer of IDRs, disclosure requirements in the prospectus or letter of offer, dealing in depository mode through custodians and underwriters, and their sale, transfer or transmission. It applies whether or not a place of business is established, so the last option is wrong.

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