Sources of Corporate Finance — Secretarial Practice STD 12 Commerce / Arts — Question

There are 2 companies namely company A and company B with the same financial positions and in the same line (producing the same type of products) willing to issue debentures to more than 500 people. Company A is issuing 12% redeemable debentures to be redeemed after 5 years and Company B is issuing 12% convertible debentures which will be converted after 5 years. As an investor.Question (a). Which company would one like to invest in? Question (b) Is it worth investing or going for convertible or redeemable? Why? Question (c) Is there any party to be appointed to look into the safety of debenture holders?

As the company is offering debenture to its members, can such debentures have normal voting rights?

DDS financial plans to raise ₹ 10 crores by issuing secured, Non-convertible debentures. However, as per the Articles of Association, the board of directors has authority only to raise up to 5 crores. They are also considering whether to go for a private placement or make a public offer. Please advise them on the following:

Violet Ltd. Company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following:

The return on investment which he receives is fixed or fluctuating.

The management of ‘Maharashtra State Road Transport Corporation’ wants to determine the size of working capital.
Question (a). Being a public utility service provider will it need less working capital or more?
Question (b). Being a public utility service provider, will it need more fixed capital?
Question (c). Give one example of a public utility service that you come across on a day-to-day basis.

What does he receive as a return on his investment?

A company is planning to enhance its production capacity and is evaluating the possibility of purchasing new machinery whose cost is ₹ 2 crore or has alternative of machinery available on a lease basis.
Question (a). What type of asset is machinery?
Question (b). Capital used for the purchase of machinery is fixed capital or working capital.
Question (c). Does the size of a business determine the fixed capital requirement?

A public limited company wants to invite depositor from the public at large as it neither wants to dilute its shareholdings nor at present want to use its reserves.Question (a) Does it require prior approval from shareholders? Question (b) What type of resolution does the company need to pass? Question (c) Is it necessary to file the resolution with the Registrar?

Mr. Satish is a speculator. He desires to take advantage of the growing market for the company’s products and earn handsomely.