Question

    A Red Herring Prospectus is

    issued:
    A After the issue is fully subscribed Correct Answer Incorrect Answer
    B Before the issue opens, without mentioning price or quantity of securities offered Correct Answer Incorrect Answer
    C Only to existing shareholders Correct Answer Incorrect Answer
    D Only after obtaining SEBI approval for allotment Correct Answer Incorrect Answer

    Solution

    Explanation: •As per Section 32 of the Companies Act, 2013, a Red Herring Prospectus is a prospectus which does not include complete particulars of the price or the number of securities offered. •It is filed with the Registrar of Companies prior to the issue opening, typically used in book-building issues where price discovery happens based on investor bids. •After finalizing the price and quantity, the company files a final prospectus.

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