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Forms of Business Organisation — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesForms of Business Organisation3 Marks
Question
What are the steps required for raising funds from public?
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Answer

Following steps are required for raising funds from public:
  1. SEBI Approval: SEBI regulates the capital market of India. A public company is required to take approval from SEBI.
  2. Filing of Prospectus: Prospectus means any documents which invites offers from the public to purchase share and debenture of the company.
  3. Appointment of Bankers, Brokers, Underwriters: Bankers of the company receive the application money. Brokers encourage the public to apply for the shares. Underwriters are the persons who undertake to buy the shares if these are not subscribed by the public. They receive a commission for underwriter.
  4. Minimum Subscription: According to the SEBI guidelines, minimum subscription is 90% of the issue amount. If minimum subscription is not received then the allotment cannot be made and the application money must be returned to the applicants within 30 days.
  5. Application to Stock Exchange: It is necessary for a public company to list their shares in the stock exchange. Therefore, the promoters apply in a stock exchange to list company shares.
  6. Allotment of Shares: Allotment of shares means acceptance of share applied. Allotment letters are issued to the shareholders. The name and address of the shareholders is to be submitted to the Registrar.

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