Maharashtra HSC Board Paper 2023 : Secretarial Practice (52)

 

Maharashtra HSC Board 2023

Secretarial Practice (52) 

 Time: 3 Hrs.                Sub: SP            Max. Marks: 80

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Note: 1) All questions are compulsory.

          2) Figures to the right indicate full marks for the questions.

          3) Figures to the left indicate question members.

          4) Answer to every question must be started on a new page.

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Note: (1) All questions are compulsory

2) Figures to the right indicate full marks for the questions.

3) Figures to the left indicate question numbers.

(4) Answer to every question must be started on a new page.

Q. 1. (A) Select the correct answer from the options given below and rewrite the sentences:                                                   (5)     [20]

(1) Company has to pay ___________ to government.

(a) taxes                (b) dividend          (C) interest

Ans: Taxes          

(2) __________ shares are issued free of cost to existing equity shareholders.

(a)Equity               (b) Right               (c)Bonus

Ans: Bonus

(3) ________ is a proof of title of shares.

(a) Register of member             b) Share certificate           (c) Letter of Allotment

Ans: Share certificate

(4) Debenture Capital is a ________ capital of a company.

(a) owned              (b) permanent                 (c) borrowed

Ans: Borrowed

(5) Dividend is paid first to _______ shareholders.

(a) equity              (b)Preference                  (c) deferred

Ans: Preference

(B) State whether the following statements are True or False:         (5)

(1) Finance is related to money and money management. True

(2) Share certificate is issued for partly or fully paid up share. False

(3) Government company can collect deposits from its members.  True

(4) Depositors are given voting rights. False

(5) Primary market is also known as new issue market. True

(C) Find the odd one:                                          (5)

(1) Face value, Market value, Redemption value.

Ans: Redemption value

(2) Convertible debentures, Irredeemable debentures, Secured debentures.         

Ans: Secured debentures

(3) Dividend warrant, Interest warrant, Demat.

Ans: Demat

(4) DP, RBI, Depository.

Ans: RBI

(5) Final dividend, Interim dividend, Interest.

Ans: Interest

(D) Select the correct option from the bracket.             (5)

Group A	Group B
(a) Equity Share	(1) -------------
(b) Operation of Law	(2) -------------
(c) -------------	(3) Debenture Certificate
(d) Dematerialization	(4) -------------
(e) -------------	(5) Oldest stock exchange in India

[Issued within 6 months of allotment, Physical to electronic mode, Fluctuating rate of dividend, Bombay Stock Exchange, Transmission of shares]

Ans:

Group A	Group B
(a) Equity Share	(1) Fluctuating rate of dividend
(b) Operation of Law	(2) Transmission of shares
(c) Issued within 6 months of allotment	(3) Debenture Certificate
(d) Dematerialization	(4) Physical to electronic mode
(e) Bombay Stock Exchange	(5) Oldest stock exchange in India

 

Q. 2. Explain the following terms/ concepts (Any FOUR):     [8]

(1) Working Capital

Ans:

        i.            Working capital is the capital which is used to carry out the day to day business activities.

     ii.            After estimating fixed capital requirement of the business firm, it is necessary to estimate the amount of capital, that would be needed to ensure smooth functioning of the business firm.

   iii.            A business firm requires funds to store adequate raw material in stock. A firm would need capital to maintain sufficient stock of finished goods. In actual practice, goods are sold out in cash or on credit.

   iv.            Goods sold on credit do not fetch cash immediately. Firm will have to arrange for funds till the amount is collected from the debtors. Cash is also required to pay overheads.

(2) Overdraft

Ans:

        i.            A company having current account with bank is allowed overdraft facility.

     ii.            The borrower can withdraw funds as and when needed. He is allowed to overdraw on his current account, up to the credit limit which is sanctioned by bank.

   iii.            Within this stipulated limit any number of drawings are permitted.

   iv.            Repayments can be made whenever required during the time period. The interest is determined on the basis of actual amount withdrawn

(3) Rights issue

Ans:

        i.            When a company needs more funds for expansion purpose and raises further capital by issue of shares, the existing equity shareholders may be given priority to get newly offered shares.

     ii.            This is called ‘Right Issue’. The shares are offered to equity shareholder first, in proportion to their existing shareholding.

(4) Depository Participant (DP)

Ans:

        i.            It keeps the securities safe.

     ii.            Securities are held in accounts having unique IDs.

   iii.            There is no physical handling of securities during allotments, transfers, etc.

   iv.            The transfer of securities between accounts is done.

(5) Secondary Market

Ans:

        i.            The securities issued earlier are traded in the secondary market.

     ii.            Indirect investment as the securities are acquired from other stakeholders.

   iii.            The parties dealing in this market are only investors.

   iv.            The security brokers are the intermediaries

      v.            The price of security is fluctuating, depending on the demand and supply conditions in the market.

(6) Stock Exchange

Ans:

        i.            Stock exchange is a specific place where various types of securities are purchased and sold.

     ii.            The term securities include equity shares, preference shares, debentures, government securities and bonds, etc. including units of Mutual Funds.

   iii.            Stock markets act as intermediary between investors and borrowers. To provide safety and stability to the investors, Stock exchanges in India are regulated by SEBI

   iv.            According to the Securities Contracts (Regulation) Act 1956, the term stock exchange is defined as, “An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.”

Q.3. Study the following cases / situations and express your opinion (Any TWO):                                                                                   [6]

(1) Sai Ltd. Company is newly incorporated public company and wants to raise capital by selling equity shares to the public. The Board of Directors are considering various options for this. Advise the Board on the following matters

(a) What should the company offer - IPO or FP0?

(b) Can the company offer Bonus shares to raise its capital?

(c) Can the company enter into Underwriting Agreement?

(2) Mr. Kishore wants to demat his 25 shares of Hero Company Ltd. bearing certificate no. 100 and distinctive no. 76-100:

(a) Which form is he required to fill as a written request to the DP-DRF or RRF?

(b) Does he have to fill instrument of transfer if he wishes to transfer the same, after demat?

(c) Does he have to quote certificate number and distinctive number, if he wishes to transfer his shares after it is in demat form?

(3) Diamond Company Limited is considering to declare Interim Dividend:

(a) In how many days of declaration it should transfer the funds to Dividend Account?

(b) In how many days it must pay it to Shareholders?

(c) Can the Board of Directors declare Interim Dividend out of capital?

Q. 4. Distinguish between the following (Any THREE) :        [12]

(1) Fixed capital and Working capital.

Points	Fixed Capital	Working Capital
Meaning	Fixed capital refers to any kind of physical asset i.e. fixed assets.	Working capital refers to the sum of current assets.
Nature	It stays in the business almost permanently.	Working capital is circulating capital. It keeps changing.
Purpose	It is invested in fixed assets such as land, building, equipments, etc	Working capital is invested in short term assets such as cash, account receivable, inventory, etc
Source	Fixed capital funding can come from selling shares, debentures, bonds, long term loans, etc.	Working capital can be funded with short term loans, deposits, trade credit, etc.
Objective	Investors invest money in fixed capital hoping to make future profit	Investors invest money in working capital for getting immediate returns.
Risk	Investment in fixed capital implies more risk.	Investment in working capital is less risky.

 

(2) Shares and Debentures

Points	Share	Debenture
Meaning	A share is a part of share capital of a company. It is known as ownership securities.	A debenture is a certificate of loan taken by a company. They are also known as creditorship securities.
Status	A holder of shares is the owner of company. Therefore share capital is owned capital.	A holder of debenture is creditor of the company. Debenture capital is loan capital or borrowed capital.
Nature	It is permanent capital. It is not repaid during the life time of the company.	It is temporary capital. Generally it is repaid after a specific period.
Voting Right	Shareholders being owners enjoy normal voting rights in general meeting. They participate in the management of the company.	Debenture holders being creditors, do not have any voting right. They can not participate in the management of the company.
Return on Investment	Return on shares is called dividend. Equity shareholders receive divided at fluctuating rate where as preference shareholders receive divided at fixed rate.	Return on debenture is called interest. It is fixed at the time of issue. Interest is paid even when company has no profit
Time issue	Shares are issued in the initial stages of the company formation.	Debentures are issued at a later stage, when the company has properties to offer as security.
Types	Shares are classified into __ a) Equity shares b) Preference	Debentures are classified as : a) Registered Debentures b) Bearer Debentures c) Secured Debentures d) Unsecured Debentures e) Redeemable Debentures f) Irredeemable Debentures g) Convertible Debentures h) Non - convertible Debentures
Suitability	Shares are suitable for long term finance.	Debentures are suitable for medium term finance.

 

(3) Initial Public Offer (IPO) and Further Public Offer (FPO).

Point	IPO	FPO
Meaning	IPO refers to an offer of securities by an unlisted Public Company to the public for the first time.	FPO means an offer of securities by a listed Public Company to the public to raise subsequent capital.
Types	It is issued by an unlisted Public Company.	It is issued by a listed Public Company.
When issue	It is usually issued by an existing company which wants to raise capital from the public for the first time.	It is usually issued by a listed Public company when it wants to raise further capital from the public.
Order of issue	IPO preceeds FPO. IPO is the first time sale of shares to the public.	FPO is the second or subsequent sale of shares to the public
Listing	Company has to get itself listed for the first time before issuing IPO.	Company making an FPO is already a listed company.
Risk	It is very risky for the investor as he cannot predict the company’s performance.	It is less risky for the investor as he has an idea of the company’s past performance and can judge its future performance

 (4) Final Dividend and Interim Dividend.

Points	Interim Dividend	Final Dividend
Meaning	It is declared and paid between two AGMs.	It is declared and paid after the close of the financial year
Who Declares	It is decided and declared by the Board of Directors in the Board Meeting.	It is decided and recommended by the Board of Directors. It is declared by the shareholders in the AGM
Authorization	It can be declared only if Articles of Association permits its declaration.	It’s declaration does not need authorization by Articles of Association
When Declared	It is declared between two Annual General Meetings of the company.	It is declared at the Annual General Meeting of the company
Rate of Dividend	Rate of Interim dividend is lower than final dividend.	Rate of final dividend is always higher than Interim Dividend.
Sources	It is declared out of profits of the current accounting year.	It is declared from different sources like; current year’s profits, free reserves, capital profits, Money provided by Govt. for dividend, etc.
Accounting Aspect	It is declared before preparation of the final accounts of the company.	It is declared only after the accounts of the year are prepared and finalized

Q.5. Answer in brief (Any TWO):                                           [8]

(1) State the contents of share certificate

Ans:

It is a registered document issued by a company which is an evidence of ownership of specified number of shares of the company. Share certificate is a prima facie evidence of title to shares.

If any dispute about membership arises, the share certificate will be held as evidence and not the entries in the Register of Members. Share certificate has to be issued under the common seal of the company, if any and signed by two Directors duly authorised by the Board of Directors and the Company Secretary or any other authorised person. Company has to issue the share certificate to all allottees as well as transferees on transfer of shares. It is issued on partly or fully paid up shares.

Contents of Share Certificate : Share certificate should be in Form SH-1 as prescribed under Companies (Share Capital and Debenture) Rules, 2014. Following are the contents of a share certificate __ 

i) Name of the Company, CIN, Registered office address. 

ii) Folio Number 

iii) Share Certificate Number 

iv) Name of Member 

v) Nature of share, number of shares and distinctive number of the shares. 

vi) Amount paid on shares 

vii) Common Seal, if any and signature of two Directors and Company Secretary

(2) Explain four advantages of depository system for an investor.

Ans: A) To Investors :

1) Elimination of Risk : All risks associated with physical certificates like delays, lost, theft, mutilation, bad deliveries, etc. are totally eliminated.

2) Safety : It is the most safe and secure way of holding securities. The entire system functions under the Depository Act and is monitored by SEBI. e.g. The Investor can keep his account in a ‘Freeze / Lock' mode to avoid / prevent unexpected debit or credit or both by giving instructions to the DP.

3) Easy Transfer of shares : (a) Efforts in filling transfer forms and lodging the documents is eliminated. (b) Also the stamp duty levied on transfer of physical shares is not applicable. (c) Processing time in transfer of securities is reduced and neither the securities nor the cash is tied / held up for unnecessarily long time.

4) Updates and Intimation : The investor is provided with the status of the holdings and transactions by DP and occasionally by the Depository too.

5) Security against Loan : Dematerialised securities are preferred by banks and financial institutions as security against loan.

6) No concept of ‘Lots’ : The system of odd and even lot stands abolished. The market lot is one share for dematerialised securities.

7) Nomination Facility : Individual Investors can avail of nomination facility. This simplifies the process in the event of the death of the investor.

8) Automatic Credit : The account of investor is automatically credited/debited in case of a change initiated by the company which impacts the securities. This is called ‘Corporate Action’. Few examples which can be termed as Corporate Action are : Payment of Dividend, Issue of Bonus Shares, Offering of Rights Shares, Early Redemption of Debentures, Mergers and Acquisitions, etc.

(3) State the functions of SEBI.

Ans:

SEBI was set up with the objective of promoting the securities market, protecting the interest of the investors in securities market and to regulate the securities market. SEBI issues rules and regulations to be followed by the issuers of securities, the market intermediaries and the investors. It is a regulator of all the Stock exchanges in India.

The various functions of SEBI are –

1. To protect the interest of investors in securities market.

2. To promote the development of securities markets.

3. To regulate the business in stock exchanges and any other securities market.

4. To register and regulate the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustee of trust deeds, registrars to an issue, merchants bankers, underwriters, and such other intermediaries who may be associated with securities market.

5. To register and regulate the working of the Depositories, Depository Participants, Custodians of securities, foreign institutional investors, credit rating agencies.

6. To register and regulate the working of venture capital funds and collective investment schemes including mutual funds.

7. To promote and regulate self-regulatory organizations.

8. To prohibit fraudulent and unfair trade practice relating to securities markets.

9. To promote investors’ education and training of intermediaries of securities market.

10. To prohibit insider trading in securities.

Q.6 Justify the following statements (Any TWO):                                                        [8]
1) A Company can issue only certain types of debentures.

Ans:

1. Secured debentures : The debentures can be secured. The property of company may be charged as security for loan. The security may be for some particular asset (fixed charge) or it may be the asset in general (floating charge). The debentures are secured through ‘Trust Deed’. 

2. Unsecured debentures : These are the debentures that have no security. The issue of unsecured debentures is permitted by the Companies Act, 2013. 

3. Registered Debentures : Registered debentures are those debentures on which the name of holders are recorded. A company maintains ‘Register of Debentureholders’ in which the name, address and particulars of holdings of debentureholders are entered. The transfer of registered debentures requires the execution of regular transfer deed. 

4. Bearer Debentures : Name of holders are not recorded on the bearer debentures. Their names do not appear on the ‘Register of Debentureholders’. Such debentures are transferable by mere delivery. Payment of interest is made by means of coupons attached to debenture certificate. 

5. Redeemable Debentures : Debentures are mostly redeemable i.e. Payable at the end of some fixed period, as mentioned on the debenture certificate. Repayment can be made at fixed date at the end of specific period or by instalment during the life time of the company. The provision of repayment is normally made in ‘Trust Deed’. 

6. Irredeemable Debentures : These kind of debentures are not repayable during life time of the company. They are repayable only after the liquidation of the company, or when there is breach of any condition or when some contingency arises. 

7. Convertible Debentures : Convertible debentures give right to holder to convert them into equity shares after a specific period of time. Such right is mentioned in the debenture certificate. The issue of convertible debenture must be approved by special resolution in general meeting before they are issued to public. These debentures are advantageous for the holder. Because of this conversion right, convertible debentureholder is entitled to equity shares at a rate lower than market value. 

8. Non-convertible Debentures : Non-convertible debentures are not convertible into equity shares on maturity. These debentures are redeemed on maturity date. These debentures suffer from the disadvantage that there is no appreciation in value. 

2) All companies cannot accepts deposit from public.

Ans:

PROCEDURE FOR ACCEPTING DEPOSITS FROM PUBLIC 

Only eligible Public companies can accept deposits from public. Following is the procedure to be followed for accepting deposits from the public : 

1. Hold Board Meeting : Board meeting is held to pass a resolution to accept deposits from public. The details of amount of deposit, terms and conditions of issue, etc. are decided in this meeting. Also the date and time to hold a general meeting of the shareholders to get their approval for collecting deposits is decided in this Board Meeting. 

2. Hold a General Meeting : Company holds a General Meeting of the shareholders to seek their approval for accepting deposits. A Special resolution is passed and it has to be filed with the Registrar of Companies and if needed with RBI also. 

3. Hold Board Meeting : Board meeting is held to approve the draft advertisement. All necessary information as needed under the Act should be included in the advertisement. The draft should be signed by majority of Directors of the company. 

4. Appoint Banker : Company has to appoint a banker where the applicants will be submitting their application form along with deposit money. 

5. Obtain Credit Rating : Company has to obtain a credit rating from a recognized Credit Rating Agency. This rating should be mentioned in the advertisement. 

6. Appoint Deposit Trustee : Company has to appoint one or more Deposit Trustees. The Deposit Trust deed contains the terms and conditions agreed upon or between the company and the Trustee. The deed has to be signed at least 7 days before issuing the advertisement. 

7. Take Deposit Insurance : Company enters into an agreement with the Insurance Company for taking Deposit Insurance. The agreement should be signed at least 30 days before issuing the advertisement. 

8. File a copy of advertisement with Registrar of companies : A copy of the advertisement has to be filed with the Registrar of Companies. 30 days after filing it with the Registrar the company can publish the advertisement. 

9. Advertisement to the public : Company has to issue the advertisement after 30 days of filling it with the Registrar of Companies. The advertisement has to be published in one English newspaper and one vernacular newspaper having wide circulation in the state where the company’s registered office is located. 

10. Upload the advertisement on the company’s website : After releasing the advertisement to the public, it has to be uploaded on the company’s website. 

11. Collect application form and money : Company informs the banker to collect the application forms along with the deposit money. 

12. Issue Deposit Receipt : Company has to issue Deposit Receipt within 21 days from the date of receipt of money or realization of cheque. 

13. Create charge on assets : Company issuing secured deposits has to create a charge on its assets within 30 days of acceptance of deposit. 

14. Make entries in Register of Deposits : Within seven days from the date of issue of Deposit Receipts, Secretary has to enter the details of deposits collected in the Register of Deposits. The entries have to be verified by authorized officer. 

15. File Return of Deposits with Registrar of Companies : Company has to file a Return on Deposit before 30th June every year. The return has details of Deposits with company as on 31st March.

3) Equity share get last priority in payment of Dividend.

4) Capital Market is useful for corporate markets.

Ans: 

Q.7. Attempt the following (Any TWO):                                 [10]

(1) Write a letter to the member for the issue of share certificate.

(2) Draft a letter to debenture holder informing him about redemption of debentures.

(3) Draft a letter to the depositor regarding repayment of his deposit. 

Q.8 Answer the following Questions; [Any One]                                                     [8]

1) What is an equity share? Explain its features.

Equity Shares : 

Equity shares are also known as ordinary shares. Companies Act defines equity shares as ‘those shares which are not preference shares’. 

The above definition reveals that : 

 a) The equity shares do not enjoy preference for dividend. 

 b) The equity shares do not have priority for repayment of capital at the time of winding up of the company. Equity shares are fundamental source of financing business activities. Equity share holders own the company and bear ultimate risk associated with the ownership. 

 Features of Equity Shares : 

1. Permanent Capital : Equity shares are irredeemable shares. The amount received from equity shares is not refundable by the company during its life time. Equity shares become refundable only in the event of winding up of the company or company decides to buyback shares. Thus equity share capital is long term and permanent capital of the company. 

2. Fluctuating Dividend : Equity shares do not have a fixed rate of dividend. The rate of dividend depends upon amount of profit earned by company. If company earns more profit, dividend is paid at higher rate. On the other hand if there is insufficient profit or loss, Board of Directors may postpone the payment of dividend. Equity shareholders cannot compel them to declare and pay dividend. The income of equity shares is uncertain and irregular. The equity shares get dividend at fluctuating rate. 

3. Rights : Equity Shareholders enjoy certain rights : 

 a) Right to vote : It is the basic right of equity shareholders through which they elect directors, alter Memorandum and Articles of Association, etc.

b) Right to share in profit : It is an important right of equity shareholders. They have right to share in profit, when distributed as dividend. If the company is successful and makes handsome profit, they have advantage of getting large dividend. 

 c) Right to inspect books : Equity shareholders have right to inspect statutory books of their company. 

d) Right to transfer shares : The equity shareholders enjoy the right to transfer shares as per the procedure laid down in the Articles of Association. 

4. No preferential right : Equity shareholders do not enjoy preferential right in respect of payment of dividend. They are paid dividend only after dividend on preference shares has been paid. 18 Similarly, at the time of winding up of the company, the equity shareholders are paid last. Further, if no surplus amount is available, equity shareholders will not get anything. 

5. Controlling power : The control of company is vested with the equity shareholders. They are often described as ‘real masters’ of the company. It is because they enjoy exclusive voting rights. The Act provides the right to cast vote in proportion to share holding. They can exercise their voting right by proxies, without even attending meeting in person. By exercising voting right they can participate in the management and affairs of the company. They elect their representatives called Directors for management of the company. They are allowed to vote on all matters discussed at the general meeting. Thus equity shareholders enjoy control over the company. 

6. Risk : Equity shareholders bear maximum risk in the company. They are described as ‘shock absorbers’ when company has financial crisis. If the income of company falls, the rate of dividend also comes down. Due to this, market value of equity shares comes down resulting into capital loss. Thus equity shareholders are main risk takers.

7. Residual claimant : Equity shareholders as owners are residual claimants to all earnings after expenses, taxes, etc. are paid. A residual claim means the last claim on the earnings of company. Although equity shareholders come last, they have advantage of receiving entire earnings that is left over. 

8. No charge on assets : The equity shares do not create any charge over assets of the company. Charge on assets : Means an interest or lien created on assets of the company in favour of creditors. In case company fails to pay the debt, creditors can claim it from the company's assets. 

9. Bonus Issue : Bonus shares are issued as gift to equity shareholders. These shares are issued free of cost to existing equity shareholders. These are issued out of accumulated profits. Bonus shares are issued in proportion to the shares held. Thus capital investment of (ordinary) equity shareholder tends to grow on its own. This benefit is available only to the equity shareholder. 

10. Right Issue : When a company needs more funds for expansion purpose and raises further capital by issue of shares, the existing equity shareholders may be given priority to get newly offered shares. This is called ‘Right Issue’. The shares are offered to equity shareholder first, in proportion to their existing shareholding. 

11. Face Value : The face value of equity shares is low. It can be generally ` 10 per share or even ` 1 per share. 

12. Market Value : Market value of equity shares fluctuates according to the demand and supply of these shares. The demand and supply of equity shares depend on profits earned and dividend declared. When a company earns huge profit, market value of its shares increases. On the other hand when it incurs loss, the market value of it’s shares decreases. There are frequent fluctuations in the market value of equity shares in comparison to other securities. Therefore equity shares are more appealing to the speculator. Speculator tries to make profit from a security’s price change. 

13. Capital Appreciation : Share Capital appreciation takes place when market value of shares increases in the share market. Profitability and prosperity of the company enhances reputation of company in the share market and it facilitates appreciation of market value of equity shares. 

b) Explain the statutory provisions for allotment of shares.

Ans: 

Statutory Provisions : These are provisions laid down by the Companies Act, 2013. 

(1) Registration of Prospectus : A copy of the prospectus must be filed with the Registrar of Companies for registration on or before the date of its publication. This prospectus must be signed by every proposed Director (in case of newly formed company) or director or his duly authorised advocate. 

(2) Application Money : The Companies Act states that along with the application form, the applicant has to pay a minimum of 5% of the nominal amount of the shares or such other amount as specified by SEBI. SEBI has specified (for public companies) the application money to be minimum 25% of the nominal amount of shares. The application money is to be paid in the Bank specified by the company. A) Statutory Provisions B) General Principles 50 

(3) Minimum Subscription : Minimum subscription is the minimum amount of shares that must be taken or bought by the subscribers. This amount is mentioned in the prospectus. It must be collected within thirty (30) days from issue of prospectus. SEBI has stated minimum subscription should be 90% of the issue. 

(a) Usually when a company does not collect minimum subscription, it means its issue has been under subscribed i.e. the number of shares applied for is less than the shares offered by the company. 

(b) If minimum subscription is not collected within the specified time, the entire amount received as application money should be returned to the subscribers within fifteen days of closure of issue. To avoid such a situation, company may enter into an underwriting agreement with the underwriters. Underwriting agreement : Company enters into an agreement with underwriters by paying them a commission. The underwriters assure the company to take up the unsold shares (Securities) so that the company is able to raise its minimum subscription. 

(4) Closing of subscription list : As per SEBI, the subscription list must be kept open for atleast three working days and not more than ten working days. Applicants can apply for shares only when the subscription list is open. 

(5) Basis of allotment : Allotment of shares will be on the basis which will be decided for each category of subscribers. Allotment will be as per the minimum application size as fixed by the company. 

(6) Over subscription : Over subscription means when applications received for shares are more than the number of shares offered by the company. SEBI does not allow any allotment in excess of securities offered through offer document or prospectus. However, it may permit to allot not more than 10% of the net offer. 

(7) Permission to deal on Stock Exchange : Every company, before making a public offer shall apply to one or more recognised Stock Exchanges to seek permission for listing its shares with them. The prospectus shall mention the name of the Stock Exchange and the fact that an application for permission to list in that stock exchange has been made by the company. Listing : getting the name of a company included in the official list of securities that can be traded on a Stock Exchange. 

(8) Appointment of Managers to the issue and various other agencies : Company has to appoint one or more Merchant Bankers to act as managers to the public issue. It also has to appoint Registrar to the issue, Collecting Bankers, Underwriters to the issue and Brokers to the issue, self certified syndicate banks, advertising agents etc.