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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

While fixing conversion terms of Government-held debentures under a public interest order, which of the following must the Government take due regard of, according to the Act?

The Government must have due regard to the company's financial position, the terms of issue of the debentures or loans, the interest rate payable on them, and other matters it considers necessary. It is not limited to market price or dividend history.

  1. AOnly the market price of the company's shares
  2. BThe company's financial position, terms of issue of the debentures, and the rate of interest payable on themCorrect
  3. CThe dividend history of the preceding five years only
  4. DThe wishes of the majority of equity shareholders

Explanation

The Act directs the Government to have due regard to the company's financial position, the terms of issue of the debentures or loans, the interest rate payable, and other matters it considers necessary. Market price alone, dividend history alone or shareholder wishes are not the listed factors.

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