ABC Ltd. issued prospectus for the subscription of its shares for Rs. $500$ crores in $2008$ . The issue was oversubscribed by $20$ times. The company issued shares to all the applicants on pro-rata basis. Later SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of Rs. $5$ crores and banned its three executive directors for dealing in securities market for three years. Identify the function and its type performed by SEBI in the given case.

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Solution

Protective function and prohibition of fraudulent and unfair trade practices.

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ABC Ltd. issued a prospectus for the subscription of its shares for Rs.500 crores in 2008. The issue was oversubscribed by 20times. The company issued shares to all the applicants on a pro-rata basis. Later SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of Rs.5 crores and banned its three executive directors for dealing in the securities market for three years. Identity the function.

Q. X Ltd. invited application for 10,000 Equity Shares of ₹ 10 each issued at par . The amount was payable on application . The issue was oversubscribed by 2,000 shares and allotment was made on pro rata basis. Pass necessary Journal entries.

Q. Sangam Ltd. invited applications for 10,000 Equity Shares of ₹ 100 each issued at par. The amount was payable on application. The issue was oversubscribed by 2,000 shares and allotment was made on pro rata basis. Pass necessary Journal entries.

Guru Ltd. invited applications for issuing 5,00,000 equity shares of Rs 10. each at a premium or Rs 5 per share. Because of favourable market conditions the issue was oversubscribed and applications for 15,00,000 shares were received.

Suggest the alternatives available to the Board of Directors for the allotment of shares?

X Ltd. is registered with an authorised capital of Rs 20,00,000 divided into share of Rs 10 each. It has issued 80 $%$ of its nominal capital to general public for subscription. The issued was oversubscribed to the extent of 30,000 shares. The amount payable was as follows : Rs 2 on Application, Rs 3 on Allotment and balance in equal instalment on two calls. The shares were allotted to the public on a pro-rata basis to all the applicants. A shareholder holding 4,000 shares failed to pay both call money and his shares were forfeited. All the forfeited shares were re-issued to Mr. Mohan for Rs 8 per share. Pass necessary Journal entries.

Record the forfeiture and re-issue entries in each of the following cases:

(i) A Ltd. forfeited 1,000 shares of Rs 10 each, for non-payment of rs 2 per share. These shares were re-issued at Rs 9 per share as fully paid up.

(ii) D Ltd. issued share of Rs 20 each. All the shareholders have paid the full money except one shareholder holding 500 shares who failed to pay the final call money of Rs 2 per share. His shares were forfeited and 60 $%$ of its shares were re-issued at Rs 18 per share.

(iii) Akki enterprises forfeited 400 shares for non-payment of Rs 3 per share (Rs 20 face value). All the forfeited shares were re-issued at Rs 22 per share.

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