A public limited company decided to borrow additional funds the management of the company is not interested in dilution of control suggest a suitable type of securities raising the funds solve this case study
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company is not interested in dilution of control suggest a suitable type of securities raising the funds solve this case study
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The suitable type of security in this case - Debentures.
Since the public company wants to borrow additional funds but the management is not interested in dilution of control, a suitable type of securities for the company will be Debentures.
Debentures are like an alternative to a loan. They are used to raise debt finance. The people who hold the debentures are the creditors of the company. These people are paid a fixed amount of interest on the number of debentures they own. Since debenture holders aren't given any voting rights, the management doesn't have to worry about the dilution of control.
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