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A company making a public offer does not receive the minimum amount stated in the prospectus in the period fixed by section 39(3) of the Companies Act, 2013. What must it do with the amounts it has…

Question and options

A company making a public offer does not receive the minimum amount stated in the prospectus in the period fixed by section 39(3) of the Companies Act, 2013. What must it do with the amounts it has received from applicants?

  1. Allot securities in proportion to the amounts actually received

  2. Treat the amounts received as deposits repayable on demand

  3. Hold the amounts received in a separate account until a revised offer

  4. Return the amounts received within the prescribed time and manner

Answer and explanation

Correct answer: D - Return the amounts received within the prescribed time and manner

Section 39(1) bars any allotment unless the minimum amount stated in the prospectus is subscribed and the application money is received. Under section 39(3), if that is not achieved within thirty days of the prospectus or such other period as SEBI specifies, the amounts received must be returned within the prescribed time and manner. Proportionate allotment is exactly what section 39(1) forbids.

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