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Question
Study the following case/situation and express your opinion:
A Company plans to offer Rights Issue.
a) Which document must it send to its shareholders for offering the Rights Issue?
b) Instead of Rights Issue, if the company wants to issue shares to the public, which document must it issue for inviting the public to subscribe for it?
c) Name the document which is called as incomplete prospectus.
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Solution
(a) A document (Prospectus) called ‘Letter of Offer’ a company must send to its shareholders for offering the Right issue.
(b) If the company wants to issue shares to the public, for inviting the public to subscribe for it. the company has to issue Abridged prospectus.
(c) Red herring prospectus is called an incomplete prospectus.
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It is an incomplete prospectus.
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Liability clauses
Study the following case/situation and express your opinion:
A company stated in its prospectus that it has been making profits since the last 5 years. However, Mr. X. an investor found out that two years back the company had not made any profit. The prospectus was filed with the ROC on 1 st Jan 2017 and was issued to the public on 10th Feb 2018.
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