A company interacts with SEBI (Securities and Exchange Board of India) in the third stage of formation that is, in the stage of capital subscription. SEBI is the regulatory authority of capital markets in our country which has issued guidelines for the disclosure of information and investor protection. A company inviting funds from the general public must make adequate disclosure of all relevant information and must not conceal any material information from the potential investors as per SEBI guidelines.
Prior approval from SEBI is, therefore, required before going ahead with raising funds from public. SEBI ensures that the proposed issue of securities follows all the guidelines laid down by it, no oversubscription of any issue can be retained, full underwriting of issue is important, promoters contribution must be 25% in an issue of less than Rs.100 crore.
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