Question

    As per the Companies Act, what are the conditions for

    which should be fulfilled for right issue?
    A The offer must be made within a notice period of not less than7 days and not exceeding 30 days, with the right to renounce shares, and if declined, the Board of Directors can dispose of them as they see fit Correct Answer Incorrect Answer
    B The offer must be made within a notice period of at least 10 days and not exceeding 45 days, without the right to renounce shares, and if declined, the shares must be sold to a third party Correct Answer Incorrect Answer
    C The offer must be made within a notice period of at least 30 days and not exceeding 60 days, with no right to renounce shares, and if declined, the shares are cancelled Correct Answer Incorrect Answer
    D The offer must be made within a notice period of at least 20 days and not exceeding 25 days, with the right to renounce shares, and if declined, the shares are given to new shareholders Correct Answer Incorrect Answer
    E The offer must be made within a notice period of at least 15 days and not exceeding 30 days, without the right to renounce shares, and if declined, the Board of Directors must offer them to existing shareholders only Correct Answer Incorrect Answer

    Solution

    Section 62.Further issue of share capital: (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered— (a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the  paid-up share capital  on those shares by sending a letter of offer subject to the following conditions, namely:— (i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days or such lesser number of days as may be prescribed and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined.Companies (Share Capital and Debentures) Rules, 2014: Rule 12A. Period for notice under sub-clause (i) of clause (a) of sub-section (1) of section 62– For the purposes of sub-clause (i) of clause (a) of sub-section (1) of section 62, the time period within which the offer shall be made for acceptance shall be not less than seven days from the date of offer.

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