Chapter 3 Prospectus and Allotment of Securities

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Prospectus and allotment of securities

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What are the modes for issuance of securities by a public company?

10 points

Public offer

Private Placement

Rights Issue or Bonus Issue

Any of the above

Clear selection

What are the modes for issuance of securities by a private company?

10 points

Public offer or Private Placement

Private Placement only

Private Placement or Rights Issue or Bonus Issue

Any of the above

Clear selection

What is deemed prospectus?

10 points

Any document by which offer for sale of securities is made to the public

Any document by which offer for sale of assets is made to the public

Any document by which offer for sale of Land and Building is made to the public

Any of the above

Clear selection

What shall be stated in prospectus?

10 points

Main Object, Capital Structure and Bank Account details

Main Object, Capital Structure, Key Personnel details, Procedure for allotment and Bank Account details

Main Object and Bank Account details

Main Object, Capital Structure, Procedure for allotment and Bank Account details

Clear selection

Resolution is required for variation in terms of contract or objects in prospectus.

10 points

Board Resolution

Special Resolution

Ordinary Resolution

Special Board Resolution

Clear selection

In Red Herring Prospectus a Company which is proposing to issue the securities must file with the registrar application of it at least ________ days prior to the opening of the subscription list and offer.

10 points

3 Days

1 Day

2 Days

4 Days

Clear selection

All public companies either issue a prospectus or file an incomplete statement:

10 points

In lieu of prospectus

Information memorandum

Red herring prospectus

None of the above

Clear selection

Which company is required to issue Public Offer of securities in de-materialized form?

10 points

All Companies

Public Company making public offer for convertible securities

Public Company making public offer for non-convertible securities

Private Company making public offer

Clear selection

What shall be given in advertisement of issue of prospectus?

10 points

Objects of the Company

Liabilities of members

Names of the signatories to the memorandum

All of the above

Clear selection

A _______ prospectus with the Registrar at the stage of the first offer of securities included therein which shall indicate a period not exceeding one year as the period of validity of such prospectus commencing from the date of opening of first offer.

10 points

Shelf

Red Herring

Abridged

Deemed

Clear selection

If upon closing of the offer of securities the details of information including the total capital raised, closing price of securities are not included in red herring prospectus, the details shall be filed with:

10 points

Registrar of Companies

SEBI

RBI

Both (a) and (b)

Clear selection

ABC Ltd is in need of funds and is willing to overcome the deficit by means of issue of securities. Which amongst the below mentioned is the manner in which the securities can be issued?

10 points

Bonus Issue

Rights Issue

Private placement

All of the above

Clear selection

XYZ Ltd is allotting shares what shall be evidence that an allotment of, or an agreement to allot, securities was made with a view to the securities being offered for sale to the public –

10 points

that at the date when the offer was made the whole consideration was received by the company.

that at the date when the offer was made the whole consideration to be received by the company in respect of the securities had not been received by it

That before date when the offer was made, the whole consideration to be received by the company in respect of the securities had been received by it.

None of the Above.

Clear selection

No prospectus shall be valid if it is issued more than ______ days after the date on which a copy thereof is delivered to the Registrar

10 points

30 Days

45 Days

60 Days

90 Days

Clear selection

PQR Ltd issued a prospectus in contravention with the provisions of The Companies Act 2013, Mr. B, the Managing Director is knowingly a party to the issue of such prospectus, accordingly he is punishable with a fine which may extend to:

10 points

Rs 1,00,000

Rs 2,00,000

Rs 3,00,000

Rs 5,00,000

Clear selection

Where a prospectus, issued, circulated or distributed includes any statement which is untrue or misleading in form or context every person who authorizes the issue of such prospectus shall be liable to-

10 points

Punishment for fraud

Punishment for false statement

Punishment for false evidence

None of the above

Clear selection

Offer of securities or invitation to subscribe securities under private placement shall be made to _______ maximum number of person in the aggregate in a financial year

10 points

100

200

None of the above

Clear selection

A private company may issue securities through the way of , except-

10 points

Public offer

Rights issue

Bonus issue

Private placement

Clear selection

Registrar of companies shall refuse to register a prospectus:

10 points

If it is not dated

Contains statement of an expert who has not signed it

Contains information which is six month old

In all the above cases

Clear selection

A prospectus issued in the form of advertisement must state:

10 points

The objects for which the company has been formed

The liability of members

The amount of share capital of company

All of the above

Clear selection

Shelf prospectus remains valid upto-

10 points

6 months

1 year

2 years

5 years

Clear selection

Prospectus which does not include complete particulars of the quantum or price of the securities

10 points

Deemed Prospectus

Abridged Prospectus

Red-herring Prospectus

Shelf Prospectus

Clear selection

Pick out the correct answer from the following and give reasons:A prospectus issued by the financial institutions or bank for one or more issues of the securities or class of securities specified in the prospectus is called:

10 points

Deemed prospectus

Red- herring prospectus

Abridged prospectus

Shelf prospectus

Clear selection

The inclusion of mis-statement in a prospectus may lead to:

10 points

Civil Liability

Criminal Liability

Civil and Criminal Liability

Civil or Criminal Liability

Clear selection

Pick up the correct answer from the following and give reasons:If the company does not receive the minimum subscription, it should refund all money received from applicants for shares without interest.

10 points

Within 15 days from closure of issue of prospectus

Within 60 days of issue of prospectus

Within 90 days of issue of prospectus

None of the above

Clear selection

Private Placement shall be approved through

10 points

Special Resolution

Ordinary Resolution

Unanimous Resolution

Special resolution and approval of Central Government

Clear selection

Pick out the correct answer from the following and give reasons:The underwriting commission on shares must not exceed:

10 points

2.0 percent of the issued price of shares

2.5 percent of the issued price of shares

5.0 percent of issued price of shares

5.5 percent of the issued price of shares

Clear selection

AB Private Limited made private placement offer to identified people. It was clearly stated that such people have no right of renunciation. Company received share application money within given period of time however could not allot shares within 60 days from receipt. Now it is duty of AB Private Limited to repay the share application money. Company will be liable to pay interest if they fail to do so. Within how many days Company has to repay the share application money to avoid interest payment?

10 points

15 days

30 days

60 days

90 days

Clear selection

Extra Limited is a growing Company and requires additional funds for expansion from time to time. They are following the same process for making an offer to public and then issue those shares. This is very time and energy consuming for them. Kindly advise them if there is any way out.

10 points

During first offer they shall file prospectus with a validity on one year, so subsequent offer issued during the period of validity of that prospectus, no further prospectus is required

During first offer they shall file prospectus with a validity on two years, so subsequent offer issued during the period of validity of that prospectus, no further prospectus is required

During first offer they shall file shelf prospectus with a validity on one year, so subsequent offer issued during the period of validity of that prospectus, no further prospectus is required

During first offer they shall file shelf prospectus with a validity on two years, so subsequent offer issued during the period of validity of that prospectus, no further prospectus is required

Clear selection

Morgan Limited decided to make an offer for purchase of securities. Application Forms for the purchase were issued to public. However, it was not accompanied by an abridged prospectus. For this default Company is liable for penalty. How much penalty Company has to bear?

10 points

Rs. 25,000

Rs. 50,000

Rs. 100,000

Rs. 500,000

Clear selection

The company has to issue private placement offer-cum-application letter in

10 points

Form PAS-2

Form PAS-3

Form PAS-4

Form PAS-5

Clear selection

Private company may issue securities:

10 points

By way of rights issue

By way of bonus issue

Through private placement

Either (a) or (b) or (c)

Clear selection

According to Section 42 of Companies Act, 2013 all monies payable towards subscription of securities under private placement offer shall be paid through:

10 points

Cheque

Demand draft

Other banking channels

Either (a) or (b) or (c)

Clear selection

Which of the following statement is incorrect with reference to provisions of prospectus under Companies Act, 2013?

10 points

Prospectus to be delivered to the Registrar before its publication.

Prospectus to be issued within 90 days after the date on which a copy thereof is delivered to the Registrar.

Prospectus issued shall not include a statement purporting to be made by an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion or management.

None of the above

Clear selection

__________ means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus.

10 points

Deemed prospectus

Red-herring prospectus

Shelf prospectus

Offer for sale document

Clear selection

__________ to be filed before the issue of a second or subsequent offer of securities under the shelf prospectus

10 points

Information Memorandum

Offer for sale document

Abridged prospectus

Clear selection

Deemed prospectus shall be signed by ________, if offer is made by company.

10 points

Majority of directors

Two directors

All directors

3/4th of total number of directors

Clear selection

If prospectus is issued by company includes expert's statement, it shall include following statement that:

10 points

He is not, and has not been engaged or interested in the formation or promotion or management of

He has given his consent to issue prospectus and not withdrawn such consent.

Both of the above

None of the above

Clear selection

Which of the following statement(s) is/are correct with reference to provisions of prospectus under Companies Act, 2013?

10 points

Red-herring prospectus is issued during book building process.

Red-herring prospectus contains either the floor price of securities offered or a price band along with the range within which the Bids can move.

Both of the above

None of the above

Clear selection

__________ means a memorandum containing such salient features of a prospectus as may be specified by the Securities and Exchange Board by making regulations in this behalf.

10 points

Deemed prospectus

Shelf prospectus

Abridged prospectus

Offer for sale document

Clear selection

Where an untrue statement occurs in a prospectus, there may arise:

10 points

Civil liability

Criminal liability

Either (a) or (b)

Neither (a) nor (b)

Clear selection

A person who subscribed for shares in the faith of a false prospectus may claim from _____ compensation under Section 35 of the Companies Act, 2013.

10 points

Directors

Promoters

Either (a) or (b)

Neither (a) nor (b)

Clear selection

Which of the following statement(s) is/are incorrect with reference to provisions of prospectus under Companies Act, 2013?

10 points

The right to claim compensation for any loss or damage sustained by reason of any untrue statement in a prospectus is available to any person who has purchased securities on the faith of the prospectus containing untrue statement.

Penalty is also leviable under the Companies Act, 2013 for fraudulently inducing a person to invest money.

Impersonation for the acquisition of securities has been made an offence under the Companies Act, punishable with imprisonment.

None of the above

Clear selection

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