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Reason (R): Companies do not exhaust their authorised capital in the beginning but only a part of the authorised capital is issued for public subscription. -

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Question

Assertion (A): Authorised share capital is not issued to the public at once.

Reason (R): Companies do not exhaust their authorised capital in the beginning but only a part of the authorised capital is issued for public subscription. Rest of the authorised capital is raised by the company in a phased manner depending on the need for funds.

Options

  • Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

  • Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

  • Assertion (A) is true, but Reason (R) is false.

  • Assertion (A) is false, but Reason (R) is true.

MCQ

Solution

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

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Nature and Types of Share and Share Capital
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