Advertisements
Advertisements
Question
Justify the following statement.
Company has to fulfill certain provisions while making Right Issue.
Solution
Justification:
The following provisions company has to fulfill while making Rights Issue:
- Rights shares are sold to the existing shareholders at a price which is lesser than its market price.
- A company has to send a Letter of an offer to the
existing shareholders at the time of issuing Rights shares. - The letter of offer shall mention:
-The number of shares offered.
-The period of offer i.e. offer is valid for a period not less than fifteen days and not exceeding thirty days from the date of the offer.
-The right to renounce i.e. the shareholders have a right to give up their shares in favour of any other person. - The letter of offer can be sent by registered post, speed post, courier, or through electronic mode.
- If the shareholder does not respond to the Rights Issue offer within a stipulated time, it is implied that he is not interested in the offer and the company can offer the unsold shares to new investors.
- The company has to obtain a minimum subscription i.e. 90% of the issue.
APPEARS IN
RELATED QUESTIONS
Multiple Choice Question:
The term 'redeemable' is used for
What preferential rights are enjoyed by preference shareholders? Explain.
Match the pairs.
| Group 'A' |
Group 'B' |
|
a) Death of member |
1. Forfeiture of shares |
|
b) Voluntary return of shares to company by member |
2. Book Building Method |
|
c) Price of shares mentioned in prospectus |
3. Offered to existing employees |
|
d) ESPS |
4. Surrender of shares |
|
e) Regret Letter |
5. Transmission of shares |
|
|
6. Non-allotment of shares |
|
7. Offered to existing Equity shareholders |
|
|
8. Transfer of shares |
|
|
9. Fixed price issue method |
|
|
10. Allotment of shares |
Match the pairs.
| Group 'A' |
Group 'B' |
|
a) Issued capital |
1) Non-payment of calls |
|
b) FPO |
2) Any issue after IPO |
|
c) Bonus shares |
3) Offered to existing employees |
|
d) Issued within two months of allotment of shares |
4) Capital offered to public to subscribe |
|
e) Forfeiture of shares |
5) Share certificate |
|
6) First time issue of shares |
|
|
7) Free shares issued to existing equity shareholders |
|
|
8) Maximum capital a company can raise |
|
|
9) Allotment Letter |
|
|
10) Operation of law |
Write a word or a term or a phrase which can substitute the following statement.
Capital collected by way of issue of Equity and Preference shares.
Find the odd one.
Find the odd one.
Select the correct option from the bracket.
(First time offer of shares, Shares offered to public, Shares offered to existing Equity shareholders, Shares offered to existing employees, Transmission of shares)
|
Group 'A' |
Group "B" |
|
a) Public offer of shares |
1) ____________ |
|
b) ____________ |
2) Initial Public offer |
|
c) Rights Issue |
3) ____________ |
|
d) ____________ |
4) ESOS |
|
e) Operation of law |
5) ____________ |
Complete the sentence.
Shares issued free of cost to existing Equity shareholders is called as ______
Explain the following term/concept.
Bonus shares
Justify the following statement.
To Issue Bonus Shares, a company has to fulfill certain provisions.
Justify the following statement.
ESOS is offered by a company to its permanent employees, Directors and Officers
Match the pairs.
| Group A | Group B |
| a) Debenture holders | 1) Secured deposits |
| b) IPO | 2) Owners |
| c) Charge on assets | 3) Any issue after first-time public offer |
| d) SEBI | 4) To protect the interest of investors in securities market |
| e) Issued within two months of allotment of shares | 5) First-time public offer |
| 6) Allotment letter | |
| 7) To protect the interest of companies in securities market | |
| 8) Share certificate | |
| 9) Creditors | |
| 10) Unsecured deposits |
