Case study 3: A11 &firm is a general partnership business operating hotel in Oman consisting of partners namely: Jihan khulood, Faiza, Fahad and Aslam. They are into hotel business for nearly 10 years. Their luxury hotels provide one of the best services in Oman attracting customers from the residents of Oman as well as from around the world. Their services include accommodation, fine dining exclusively meant for their hotel customers, swimming pools, gym facilities and badminton courts. It has always received more than 4-star rating from 90% of the its customers regularly. Its huge customer base speaks for itself Such a huge support within a short span of time has not come without facing complications. During their initial years, the customers support was much less, but after learning about the hotel and its services through word of mouth from the customers who stayed in the hotel, its customer base started to improve as well as its profits. All & firm has a name on its own now. This could have never happened without the hard work of the promoters. As they have already proved themselves in the hotel Business partners are very much interested in trying their best in Al electrical appliance business producing switches and related products. Although many electrical appliance manufacturers are producing and selling such products, the partners are of the view that they have better understanding of the customers. The feasibility study revealed that the business has huge prospects due to the already existing customer base of the company. It also indicated that the business has to endure losses for the first two years from its inception as the customers need some time to change their loyalty to the newly launched brand. Because of this the sales will be low. Gradually, the company can pick up by heavy advertising and huge discounts which will improve the profit earning capacity of the new venture. Business associations also will improve sales. With the boom in the real estate business and growing demand for AI electrical appliances the market reports show highly positive projections and a huge growth rate of 25 to 35% in the coming years Estimation based on the business proposal showed that in order to start the manufacturing business it must invest OMR 50 million in total. Initial investment would be 25 million. This includes investment in buildings, modern machines and technology. All & firm already have created its name in the business and had a good public image for its outstanding services. The firm had enough cash resources but investing so much money at ones will lead to cash problems in their existing business. L&A legal associates were consulted to understand the various possibilities available to All & firm with such an opportunity. After a few sessions it was concluded that it would be better to set up a new public limited company i.e., SAOG for such business opportunity. All the partners readily agreed, and the legal consultants gave a clear idea of legal procedures and steps to be followed. Omani Commercial Companies law stipulates the details of the procedure and rules to be followed in setting up a public limited company The company was to be registered as All S.A.O.G. with all its partners becoming promoters in the company The company had an authorized capital of OMR 180 million divided into ordinary shares of 200 baiza each. To aid the process of raising the initial amount the promoter 20% of share capital and 40 % was decided to be raised by making an initial public offering The offer opening and closing Date was 1" July 2019 - 10 July 2019. Bank Dhofar SAOG was appointed as the issue manager and the all nationalized Omani Bank were to be the collection banks Reporting accountants were PricewaterhouseCoopers, appointed auditors were KPMG. Legal Adviser to were MJ & Co. Barristers & Legal Consultants and Marketing Adviser were Megatron. Each single share carried the right to one vote at any general meeting. Offer price for each share was at a premium of 15% along with additional share issue expense of 2 baiza per offer share. Purpose of the PO 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 3,000 Offer Shares and in multiples of 100 Shares. 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. The company's issue was oversubscribed by 2 times of which 0.5 times were prohibited investors whose application was rejected. Of all the qualified investors' allotment was made pro-rata. Excess amounts were refunded within one week You are required to analyse the given situation and detail out the following: a. What made All & firm so confident about taking a decision to start All S.A.O.G. Briefly discuss as to why the partners decided to set up a new company for the electrical appliance project apart from its existing partnership firm. (3 marks - Min 150 words) b. What exactly it means by having an oversubscription to the IPO and how was it dealt by the company in the give scenario? Also list out the various parties involved in the IPO (3 marks = 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 All S.A.O.G. after the issue. Show necessary calculations (4 marks)