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Under a private-placement offer, the company must NOT use the application money for any purpose other than:
Answer & Solution
Correct answer: B.
1. Section 42(6) requires the application money to be kept in a separate bank account and used ONLY for allotment or refund.
2. Any other use triggers a fine of up to Rs 2 crore.
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — Prospectus and Allotment_