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Direction: Read the following text and answer the questions on the basis of the same:
Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.
Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?
  • a)
    Control over funds
  • b)
    Control over management
  • c)
    Control over risks
  • d)
    Control over the activities of the company
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Direction: Read the following text and answer the questions on the ba...
Control Consideration means the amount per Company Share to be received by Company Shareholders in connection with a Change of Control Transaction, with any non-cash consideration valued as determined by the value ascribed to such consideration by the parties to such transaction.
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Direction: Read the following text and answer the questions on the ba...
Meaning of Control Consideration in this Context:
In the given context, the term "control consideration" refers to the equity shareholders' concern regarding the potential impact on their ability to control the activities of the company. It implies that the issuance of more shares would dilute the existing shareholders' ownership and control over the company.

Explanation:
1. Background:
- Faulad Steel Ltd. is a multi-product company manufacturing steel pipes for various applications.
- The company has received a big order from a multinational corporation (MNC) that requires additional funds.

2. Need for Additional Funds:
- The company needs additional funds to fulfill the MNC's order.
- However, the finance manager reported that the company is not in a position to bear the extra burden of explicit cost.

3. Equity Shareholders' Concern:
- The equity shareholders of the company insist not to issue more shares.
- The reason behind their insistence is the potential impact on their control consideration.

4. Control Consideration:
- Control consideration refers to the concern of equity shareholders about maintaining control over the activities of the company.
- By issuing more shares, the existing shareholders' ownership percentage would decrease, leading to a potential dilution of their control.

5. Ploughing Back of Profit:
- As the company cannot issue more shares and the explicit cost is not feasible, the only option left is to plough back the profit.
- Ploughing back of profit refers to retaining the earnings generated by the company and reinvesting them in the business.

Conclusion:
In this context, control consideration refers to the equity shareholders' concern regarding the potential dilution of their control over the activities of Faulad Steel Ltd. if more shares are issued. As a result, the company has decided to plough back its profit to meet the additional funding requirement.
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Direction: Read the following text and answer the questions on the basis of the same:Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?a)Control over fundsb)Control over managementc)Control over risksd)Control over the activities of the companyCorrect answer is option 'D'. Can you explain this answer?
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Direction: Read the following text and answer the questions on the basis of the same:Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?a)Control over fundsb)Control over managementc)Control over risksd)Control over the activities of the companyCorrect answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Direction: Read the following text and answer the questions on the basis of the same:Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?a)Control over fundsb)Control over managementc)Control over risksd)Control over the activities of the companyCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Read the following text and answer the questions on the basis of the same:Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?a)Control over fundsb)Control over managementc)Control over risksd)Control over the activities of the companyCorrect answer is option 'D'. Can you explain this answer?.
Solutions for Direction: Read the following text and answer the questions on the basis of the same:Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?a)Control over fundsb)Control over managementc)Control over risksd)Control over the activities of the companyCorrect answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
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