CA Inter P2 · Chapter 3 · Question 8 of 10
Nova Pvt Ltd received application money in a private placement on 1 June. It has not allotted the securities. Under section 42(6), which of the following is correct?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It must allot within 60 days of receipt; if not, refund within 15 days after the 60 days, failing which it pays interest at 12% per annum from the expiry of the 60th day
Explanation
Section 42(6) requires a company making a private placement to allot within sixty days from receipt of the application money. If it cannot, it must repay the money within fifteen days from the end of the sixty days. If it fails to repay within that time, it must repay with interest at twelve per cent per annum from the expiry of the sixtieth day.
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