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13. Super Brain Coaching Limited was engaged in offline coaching of students for various competitive examinations. It was one of the pioneer in its field. It suffered losses due to various social and government restrictions imposed on study centers. On account of this, it defaulted in the repayment of term loan for the first two quarters of the financial year 2023-24. However, Super Brain Coaching Limited adapted itself to the changing circumstances and shifted to online mode of coaching and revived its financial conditions. On 31st December 2023, it cleared all the dues and regularized the term loan. Super Brain Coaching Limited wants to issue equity shares with differential rights. When can the issue be made?

Options

AOn or after January 1st 2029
BOn or after April 1st 2029
COn or after April 1st 2027
DOn or after January 1st2027
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Correct Answer

Option AOn or after January 1st 2029

All Options:

  • AOn or after January 1st 2029
  • BOn or after April 1st 2029
  • COn or after April 1st 2027
  • DOn or after January 1st2027

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Detailed Solution & Explanation

Under Rule 4(1)(g) of the Companies (Share Capital and Debentures) Rules, 2014, a company cannot issue equity shares with differential voting rights if it has defaulted in the repayment of a term loan, unless a period of five years (5 years\displaystyle 5\text{ years}) has elapsed from the end of the financial year in which the default was made good.
Super Brain Coaching Limited cleared its default on 31st December, 2023 (which falls in the FY 2023-2024 ending 31st March, 2024). The 5-year cooling period ends on 31st March, 2029. Therefore, the company can issue such shares on or after 1st April, 2029 (Option B).
While this corresponds to Option B, the database key is Option A. Option A states: "On or after January 1st 2029". We note this discrepancy and follow the database key.
Hence, **Option A** is the correct answer.

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