RP Ltd. is planning to issue an IPO in 2019 for which a draft offer document is proposed to be filed in September, 2019. The following data is available regarding the company: 2015-16 (₹ in crore) 2016-17 (₹ in crore) 20

CS Executive · Securities Laws and Capital Markets · PYQS · December 2020
RP Ltd. is planning to issue an IPO in 2019 for which a draft offer document is proposed to be filed in September, 2019. The following data is available regarding the company: 2015-16 (₹ in crore) 2016-17 (₹ in crore) 2017-18 (₹ in crore) Net Tangible Assets 5.00 8.00 7.00 Monetary Assets 1.00 3.00 3.00 Net Worth 3.00 4.00 5.00 (iii) How will you deal with the situation, if company has monetary assets of ₹ 5 crore in the year 2017-18?

Answer & Explanation:

As per SEBI regulation, if more than 50% of the net tangible assets are held in monetary assets, the issuer has utilized or made firm commitment to utilize such excess monetary assets in its business or project. Therefore, if monetary assets are ₹5 crores in 2017-2018, the company should have made firm commitment to utilize such excess monetary assets in its business or project, otherwise the company will not be able to proceed for IPO.

Topics: Public Issues

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