Maxgrow Ltd. (a listed company) is manufacturing the solar PV modules in India. It is a cash rich company with cash reserve of ₹ 500 crore. It declared a dividend of ₹ 20 per share (face value ₹ 10 each). Before the reco

CS Executive · Capital Market and Securities Laws · PYQS · June 2024
Maxgrow Ltd. (a listed company) is manufacturing the solar PV modules in India. It is a cash rich company with cash reserve of ₹ 500 crore. It declared a dividend of ₹ 20 per share (face value ₹ 10 each). Before the record date, many mutual fund houses, HNIs and Institutional investors shown interest in the shares of Maxgrow Ltd. through block deal. Ranjan, a shareholder did not receive the dividend declared by the company after the expiry of prescribed period. Since last two months, there is heavy fluctuation in the price of the shares of Maxgrow Ltd. and with very thin trading volume. The stock exchange based on its surveillance system, took stringent action in the interest of the investors. Technet Ltd, subsidiary of Maxgrow Ltd. is in the business of data analytics since last two years. It is providing the services to the fortune 500 companies across the world. The management wishes to list its securities with the stock exchange, by floating an IPO. After analyzing the case study, answer the following (with reasons): Is it possible to list shares for a two year old company in the stock exchange?

Answer & Explanation:

In the given case, Technet Ltd. is in business of data analytics since last two years and wishes to list its securities with the stock exchange, by floating an IPO. An issuer not satisfying the condition stipulated in regulation 6(1) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, shall be eligible to make an initial public offer only if the issue is made through the book-building process and the issuer undertakes to allot at least seventy five per cent. of the net offer to qualified institutional buyers and to refund the full subscription money if it fails to do so. Therefore, Technet Ltd. opt for the route as available under Regulation 6(2) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 for making an initial public offer and listing thereof.

Topics: Public Issues

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