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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 lists the routes through which a public company may issue securities?

A public company may issue securities by a public offer through a prospectus, by private placement, or by a rights issue or bonus issue. Section 23(1) allows all three routes, so a prospectus is not the only way to raise capital.

  1. AOnly through a prospectus offered to the public
  2. BPublic offer through prospectus, private placement, or a rights issue or bonus issueCorrect
  3. COnly through private placement and bonus issue
  4. DOnly through a rights issue, since existing shareholders have priority

Explanation

Section 23(1) permits a public company to issue securities to the public through a prospectus, through private placement, or through a rights issue or bonus issue. The other options leave out one or more of these permitted routes.

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