Passage:

Instruction read the passes carefully and answer the following question 46-50

XYZ Limited is registered with an authorized capital of ₹ 20 lakh divided into two lakhs equity share of ₹10 inch.

The company is in manufacturing of the pickles and spices due to increase in the demand of the packed food in the market. They decided to diversify its operation.. for this purpose they decided to issue when lack equity share of ₹10 each. The company issued 20,000 equity share to a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares for issued to the general public for subscription. The application were received for 46,000 equity shares. Due to under subscription of the equity, share the share we are not issued to the public.

Q. 5054546. The company issued 20,000 equity shares of ₹10 each to vendor. After issuing them the shares the vendor will be considered as:

(A) Creditors

(B) Owners

(C) Customer

(D) Lender

Answer: (B) Owners

Explanation: Once the vendor accepts equity shares as a purchase consideration, they legally become shareholders of the company. Shareholders are the owners of the company.

Q. 5054547. In order to raise money by issuing the shares in the market the company must get applications for at least

(A) 1,00,000 shares

(B) 80,000 shares

(C) 72,000 shares

(D) 20,000 shares

Answer: (C) 72,000 shares

Explanation: According to SEBI guidelines, a company must receive a minimum subscription of 90% of the issued capital before proceeding with the allotment. (Assuming from the context that 80,000 shares were offered to the public, 90% of 80,000 = 72,000 shares).

Q. 5054548. The process of issuing shares to a vendor in exchange of any asset is known as:

(A) Issue of share for cash

(B) Issue of share at discount

(C) Issue of share at premium

(D) Issue of share for consideration other than cash

Answer: (D) Issue of share for consideration other than cash

Explanation: When a company acquires an asset (like machinery or a building) and pays the seller (vendor) by issuing shares instead of a cash payment, it is termed “Issue of shares for consideration other than cash”.

Q. 5054549. If the company is unable to get minimum subscription, the shares cannot be issued and the amount must be refunded within 8 days from the date of closure. If not, company shall be liable to pay _____% interest p.a.

(A) 10%

(B) 15%

(C) 6%

(D) 5%

Answer: (B) 15%

Explanation: According to SEBI (ICDR) Regulations, if the minimum subscription is not achieved and the application money is not refunded within the stipulated timeframe, the company and its directors become jointly liable to repay it with an interest rate of 15% per annum.

Q. 5054550. The following refer to the maximum amount of share capitals issued by a company in its life times except:

(A) Subscribed Capital

(B) Authorised Capital

(C) Nominal Capital

(D) Registered Capital

Answer: (A) Subscribed Capital

Explanation: Authorised Capital, Nominal Capital, and Registered Capital are all synonymous terms representing the absolute maximum amount of share capital a company is legally authorized to issue. Subscribed Capital is only the portion of issued capital that the public has actually applied for and agreed to buy.