2. What is Articles of Association?
Articles of Association is another document of paramount significance in the
life of a company. It contains regulations for the internal administration
of a company's affairs. They prescribe rules and bye-laws for the general
management of the company and for the attainment of its objects as given in
its memorandum.
3. What is 'Prospectus'?
The term 'prospectus' includes any document, however informal, which invites
deposit from the public or offers shares or debentures of a company for subscription
to the public. The object of a prospectus is to arouse the interest of the
potential investors in the company and induce them to invest in its shares
or debentures.
4. When does company file Statement in Lieu of Prospectus?
A public company having a share capital may sometimes decide not to approach
the public for securing the necessary capital because it may be confident
of obtaining the required capital privately. In such a case it will have to
file a 'statement in lieu of prospectus' with the Registrar instead of a prospectus.
5. Define prospectus?
Section 2(36) defines the term 'Prospectus' in these words: "a prospectus
means any document described or issued as a prospectus and includes any notice,
circular, advertisement, or other document inviting deposits from the public
or inviting offers from the public for the subscription or purchase of any
shares in, or debentures of, a company."
6. What is 'Listing of shares'?
Only those securities can be bought and sold at a recognised stock exchange
which are included in its official list. Such an inclusion in the official
trade list of the Stock Exchange is technically termed as "listing
of securities".
7. State advantages of listing of shares?
(1) Enlisting of shares and debentures of a company with a stock exchange
increase their marketability.
(2) It instills confidence into the mind of the investor because the Exchange
does not grant permission to dealing to the securities on its trading floor
unless certain strict listing conditions and other requirements are complied
with.
8. What is stock exchange?
The Securities Contracts (Regulations) Act of 1956
defines a Stock Exchange as "an association, organization or body of individuals, whether incorporate or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities."
9. Who is underwriter?
An underwriter is a person who in the event of the public not taking up the whole shares of a company or the number mentioned in the agreement, the underwriter will, for agreed commission, take an allotment of such part of the shares as the public has not applied for.
10. What do you mean by underwriting of shares?
Underwriting of shares means an agreement entered into before the shares are
brought before the public, that in the event of the public not taking up whole
of them, or the number mentioned in the agreement, the underwriter will, for
agreed commission, take an allotment of such part of the shares as the public
has not applied for. Underwriting of shares is a device used by companies
for making sure that the necessary capital comes forth even if the proposed
issue gets a poor public response.
