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# in case of debentures underwriting commission will be

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### Mohammed

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स्रोत : www.toppr.com

## The underwriting commission in case of issue of debentures can’t exceed:a)3%b)2.5%c)4%d)5%Correct answer is option 'B'. Can you explain this answer?

Option A 2.5% is the correct answer in case of debentures

CA Foundation Question  >  The underwriting commission in case of issue ...

The underwriting commission in case of issue of debentures can’t exceed:

a) 3% b) 2.5% c) 4% d) 5%

### Related Test

Test: Issue Of Debentures - 1

Dashvanth Kumar Nov 26, 2018 Related

The underwriting commission in case of issue of debentures can’t exceed:a)3%b)2.5%c)4%d)5%Correct answer is option 'B'. Can you explain this answer?

Option A 2.5% is the correct answer in case of debentures

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According to Companies Act, underwriting commission should not exceed 5 per cent of the nominal value of a share and 2½ per cent in the case of debentures.

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स्रोत : edurev.in

## [Solved] What rate should the commission payable on the issue of debe

Meaning and Nature of Underwriting: ​Underwriting in the context of a company means undertaking a responsibility or giving a guarantee that the securities

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## What rate should the commission payable on the issue of debentures not exceed?

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2 ½ % 3% 4% 5%

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## Detailed Solution

Meaning and Nature of Underwriting:

​Underwriting in the context of a company means undertaking a responsibility or giving a guarantee that the securities (shares and debentures) offered to the public will be subscribed for.

The firms which undertake the guarantee are called ‘underwriters’.

Underwriting is similar to insurance in the sense that it provides protection to the issuing company against the failure of an issue of capital to the public.

Underwriting Commission:

According to Sec. 76 of the Companies Act, 1956, the payment of underwriting commission is made if the following conditions are satisfied:

The payment of commission is possible only when the same is authorized by the Articles;

The commission paid or agreed to be paid does not exceed

In the case of shares, 5% of the price at which the shares are issued or the amount or rate authorized by the Articles, whichever is less, and

In the case of debentures, 2½% of the price at which the debentures are issued or this amount or rate authorized by the Articles, whichever is less;

Hence, the maximum rate of commission on the issue of shares is 5% and on the issue of Debentures @ 2½% at which the shares or debentures are issued.

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## More Debentures Questions

Q1. In Sinking Fund for redemption of Debentures Account, the amount is transferred every year fromQ2. When all the debentures are redeemed, the balance left in the debenture sinking fund account is transferable toQ3. To what rate does the law limit the commission payable on the issue of debentures?Q4. Convertible debentures are those on which

## More Corporate Accounting Questions

Q1. Part of capital which can be called-up at the time of winding of company is called:Q2. After re-issue of forfeited shares, balance of share forfeiture account is transferred to:Q3. The effect of surrender of shares is the same as of shares':Q4. In Sinking Fund for redemption of Debentures Account, the amount is transferred every year fromQ5. A company forfeited 100 equity shares of ₹10 each on which a final call of ₹4 per share was unpaid. At what minimum rate per share these shares can be reissued by the company?Q6. Share Allotment Account is aQ7. Which of the following can not be used for redemption of preference shares?Q8. Interest on calls in arrears according to Table 'A' is charged atQ9. The difference between 'subscribed capital' and 'called up capital' is calledQ10. Which one of the following statements is not correct?

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Mohammed 4 day ago

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