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

Under the Companies Act, 2013, which of the following correctly describes the expression 'public offer' for the purposes of the Chapter on prospectus and allotment of securities?

A public offer includes an initial public offer, a further public offer, or an offer for sale by an existing shareholder, each made through a prospectus. It is not limited to fresh issues and does not include private placement, which is governed separately.

  1. AIt covers only a fresh issue of shares by a company to the public through a prospectus
  2. BIt includes an initial public offer, a further public offer, or an offer for sale of securities to the public by an existing shareholder, made through a prospectusCorrect
  3. CIt covers only offers made by a listed company to its existing shareholders
  4. DIt includes private placement to up to 200 identified persons

Explanation

The Explanation to section 23 says 'public offer' includes an initial public offer or further public offer of securities to the public by a company, or an offer for sale by an existing shareholder, through issue of a prospectus. A fresh issue alone is too narrow, and private placement is a separate route under Part II.

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