Case Study 1: Agency & bros is a general partnership business consisting of partners namely: Imran, Fatma, Ahmed, Fareed and Zayed. They have been in the field for nearly 20 years and their businesses consist of health care, transportation, logistics and automobiles. All these businesses are successful earning huge profits. The partners of the firm decided to venture into manufacturing sector producing fresh juices like Orange, Mango, Guava, Apple etc. The partners are self - assured that their previous experience and success will help them to succeed in the new venture too. Feasibility study was conducted to find out the prospects of the new business which showed that the business has the capacity to create 150 direct employment opportunities and also 400 indirect employment opportunities in the field of transportation, agricultural sector etc. This will have an effect on the income generating capacity and socio - economic growth. Health experts say that eating raw fruits and vegetables provide lots of health benefits. Nowadays, people don't have time to cut or peel and eat the fruits. Given the background, the promoters think that if fresh juices are made available in the market, it will be a huge hit. Many fresh juice manufacturers are producing and selling fresh juices but it is loaded with lots of sugar which is not good for health. Present day customers are more health conscious and they will buy a product only if they are fully satisfied. So, based on the report the promoters made sure that only fresh fruits will be used without any additives keeping in mind the health of the customers. Once the product is established in the market, then profits will begin to increase. The company is expecting substantial demand to come from bakeries, Fast food chains, grocery stores etc. Quality fresh juices at affordable prices and consideration of customers' health will make their product a first of its kind in Oman. It is poised to attract customers and thereby improving its income generating capacity. Business plan indicated the estimation to start this business would be OMR 40 million requiring investment in buildings, modern machines and technology. Collectively the partners decided to venture out by setting up a public limited company for such manufacturing unit. Agency and partnership is known for its high - quality products and services; hence the public would not mind investing in the shares issued by the company. MMK Legal and Auditing professional firm was consulted to understand the procedure to be followed to set up a public limited company i.e. , SAOG. The advisory firm gave a clear idea of legal procedures and steps to be followed. Omani Commercial Companies law stipulates the details of the procedure to be followed and rules to be followed for the starting a public limited company and the process was initiated. Oman's legal procedures have been drawn with the intention of bringing more fruitful investors and lenders for every company. It is also important to note that the company could go for borrowings from the commercial banks and other financial institutions. All the partners of Agency & bros became the promoters in the formation of Agency S.A.O. and followed rules rulesed by the Commercial Companies law and commercial registered law. The initial process was completed by 1st October 2019. Agency S.A.O.G entrusted with a Board of directors consisting of five promoters as minimum to decide the matters accordingly as per the provisions of the commercial company law. The company had to qualify for its minimum capital requirement through an Initial Public Offering. In order to raise the required capital amount, based on the information given above, the promoters decided to take a loan of OMR 5 million from Bank Muscat. The Company was to be registered with capital of OMR 50 million divided into shares of 200 baiza each. 25% of the share capital was contributed by the promoters and 50% of the share capital was to be raised through an initial public offer. The type of shares offered for subscription consist only of ordinary shares. Each single share carries the right to one vote at any general meeting. Offer price for each share was at a premium of 10% along with

additional

share issue expense of 2 baiza per offer share. Purpose of the IPO is to comply with the obligations stipulated in the Oman commercial law with regards to company formation. Persons eligible for Offer Shares can be Omani and non - Omani individuals and juristic persons who apply a minimum of 2.000 Offer Shares and in multiples of 100 Shares only. Persons prohibited from subscribing to the Offer are the following: Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit applications in their personal names. Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names. Multiple Applications: An Applicant may not submit more than one Application. Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs). All such Applications will be rejected without contacting the Applicant. Proposed allocation procedure: In case of oversubscription, for the purpose of allocating the Offer Shares between the eligible investor groups, the allocation of the Offer Shares will be 1: 4. The maximum limit of shares allotted to an individual cannot be more than 50,000 shares. Offer opening and closing Date was 3 December 2019 - 12 December 2019. Bank Nizwa SAOG was appointed as the issue manager and the all nationalized Omani Bank were to be the collection banks. Collection Brokers consisted of GB Capital Markets S.A.O.C.; UB Capital S.A.O.C.; US - securities LLC and the reporting accountants were MZ accounting firm. The company issue was oversubscribed by 4.3 times of which 0.3 times were prohibited investors whose application was rejected. Of all the qualified investors allotment was made pro - rata. Excess amounts were refunded within three days.

You are required to analyze the given situation and detail out the following:

a. Comment upon the need for starting up Agency S.A.O.G in the given situation and also discuss briefly the roles that will be undertaken by the partners of agency & bros as promoters in such process? (3 marks - Min 150 words)

b. What was the amount of money the company was able to raise from such IPO? Is it good to have the IPO oversubscribed and does it affect the minimum subscription criteria set by the commercial law? (3 marks - Min 150 words)

c. Calculate the issue price, total number of share applications received, total number of shares rejected, total number of shares allotted and share capital structure of Agency S.A.O.G. after the IPO. Show necessary working notes. (4 marks)