Question : Which of the following statement is correct?
Statement 1: Under offer for sale the company issues a prospectus and invite the general public to purchase shares or debentures.
Statement 2: Under private placement the company sells security to the institutional investors or brokers instead of selling them to general public.
Option 1: Both are true
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 1 is false and statement 2 is true.
Correct Answer: Statement 1 is false and statement 2 is true.
Solution : Under public issue the company issues a prospectus and invite the general public to purchase shares or debentures. Under offer for sale firstly the new securities are referred to an intermediary. They further the resale the same to the general public. Under private placement the company cell security student investors or brokers instead of selling them to the general public.
Hence, option D is correct.
