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Consider the following statements.
  1. As per the present rules, Global investors are not allowed to participate in initial public offering (IPO) of a company owned by the government.
  2. A Red Herring Prospectus is a document filed by a company to SEBI (Securities and Exchange Board of India) when it plans to raise money through initial public offering (IPO).
Which of the above statements is/are incorrect?
  • a)
    1 only 
  • b)
    2 only 
  • c)
    Both 1 and 2 
  • d)
    Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements. As per the present rules, Global in...
Statement 1: Global investors are not allowed to participate in the IPO of a government-owned company.
This statement is correct. As per the present rules, global investors are not allowed to participate in the initial public offering (IPO) of a company that is owned by the government. This restriction is in place to ensure that the ownership and control of such companies remain with the government or its authorized entities.

Statement 2: A Red Herring Prospectus is filed by a company to SEBI when it plans to raise money through IPO.
This statement is incorrect. A Red Herring Prospectus is not filed by a company to SEBI when it plans to raise money through an IPO. Instead, it is a document filed with the Registrar of Companies (RoC) before the company makes its public offering. The purpose of the Red Herring Prospectus is to provide key information about the company to potential investors, including details about its business, financials, and risk factors. It is called a "Red Herring" because it contains all the necessary information about the company, except for the final offer price and the number of shares being offered.

Conclusion:
Based on the analysis of the given statements, it can be concluded that only Statement 1 is correct. Global investors are not allowed to participate in the IPO of a government-owned company. Statement 2 is incorrect as a Red Herring Prospectus is not filed with SEBI but with the Registrar of Companies (RoC).
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Community Answer
Consider the following statements. As per the present rules, Global in...
  • Global investors are allowed to participate in initial public offering (IPO) of a company owned by the government.
  • A Red Herring Prospectus, or offer document, is filed by a company to SEBI (Securities and Exchange Board of India) when it plans to raise money from the public by selling shares of the company to investors. The document is very useful to investors because it provides detailed information about the company’s business operations, financials, promoters and the company’s objective for raising funds by filing an IPOs.
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Consider the following statements. As per the present rules, Global investors are not allowed to participate in initial public offering (IPO) of a company owned by the government. A Red Herring Prospectus is a document filed by a company to SEBI (Securities and Exchange Board of India) when it plans to raise money through initial public offering (IPO).Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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