Chapter-wise Q&A | CS Executive — Paper 5, Group 2 | ICSI New Syllabus
Q. Write short notes on the following :
Leveraged Buyout (LBO)
Characteristics of Bond
Q. Venture Capital is one of the innovative financing resources for an enterprise. Explain briefly and indicate the areas of investment of Venture Capital.
Q. Write short notes on the following:
Foreign Currency Convertible Bonds
Indian Depository Receipts
Q. "An Alternative Investment Fund which has been granted registration under a particular category cannot change its category subsequent to registration, except with the approval of the SEBI". Enumerate the conditions for approval of SEBI. (June, 19 - 5 Marks)
Q. Can an AIF change its category pursuant to registration? Is the sponsor/management mandated to have an interest in AIF? (Dec 23 – 5 Marks)
Q. Write short notes on the following :
Optionally Fully Convertible Debenture
Angel Fund (Dec, 19 - 3 marks each)
Q. What is Pension Fund and Government Pension ? State the legislations governing pension in India. (Dec, 19 - 5 marks)
Q. Write short notes on the following :
Private Equity
Venture capital
Pension Fund. (Dec, 18 - 3 marks each)
Q. About three decades ago, three friends M, N and P formed a private limited company named MNP Private Limited. They began their operations with four looms and hardly couple of employees in a deserted small village of Gujarat one of India’s promising textile belts. Over the following years, with the hard labour and dedication of team, the business grew in size, volume as well as in profitability too. This help MNP Private Limited to expand its business from domestic market into exports market in the financial year 2018-19. With higher export margins and timely payment by foreign clients, later its business further emerged as a vertically integrated textile yarn manufacturer, knitted fabric and also ready-made garments producer.
By 2022, MNP’s leadership had an ambitious plan for further expanding into two new domestic plants with double of its existing capacity in the Northern part of the country, to make pan India presence. But they were also knowing that they have to look beyond their internal sources of funds and debt financing to achieve their goals. Because, in the recent past, the management had a bad experience for over- boarding bank financing. At the same time, the company never had an outside shareholder. Therefore, they are also hesitating to have someone unknown to them on the Board.
Considering the whole scenario, their Company Secretary, suggested the top management to engaged some renowned consulting firm to explore the possibilities for some good quantum of equity infusion, so that their proposed expansion program can be funded properly. This process was also suitable to the company’s founders, as they were accustomed with the private equity model as a viable alternative to an IPO, with much lower regulatory compliances. Therefore, they assigned their Company Secretary an assignment to explore and appoint some Private Equity firm interested in India’s textile sector. After couple of options being explored and evaluated by the Company Secretary, he finally sorted out M/s High Tide Capitals, a Mumbai based private equity firm, actively looking for a large investment in India’s textiles sector. In the meanwhile, one of the competing funds of M/s High Tide Capitals, after hearing this news offered a substantially high share purchase price offer to the top management of MNP Private Limited.
After considering various pros and cons, the top management decided to opt with M/s High Tide Capitals as their partner. Because, to capitalize firm’s significant expertise in the domestic textile industry as well as their links at the global textile trades through their Headquarters based at London. With this M/s High Tide Capitals joined as a minority shareholder, the relationship and mutual trust built with MNP gave a considerable sway over hiring, procurement, and other key aspects of the business. As a result, this gave a pace for setting transformations both in MNP’s culture and its stature amongst its peers. M/s High Tide Capitals also help in addressing gaps of MNP’s governance aspect that was one of the key hinderance in its ambitious expansion project.
At the time of M/s High Tide Capitals investment, MNP Private Limited had no formal business plans and also does not have effective budgeting process through which the costs of several inputs were to be properly tracked. However, M/s High Tide Capitals also helped MNP Private Limited to design a proper business plan and budgeting process from scratch. All these support from M/s High Tide Capitals, has help to become an integral part of MNP’s corporate culture and removed a bottleneck that had hampered plans for scaling operations. With passage of time, M/s High Tide Capitals is not considered as an outsider for MNP’s top management, rather they are an integral part of top management.
Based upon the case study, answer the following :
What is a private equity ?
What are the characteristics of private equity invested by High Tide Capitals ?
What are the different types of private equity investments ?
Who are the investors in a private equity firm, like the High Tide Capitals ?
What are the alternative sources of arranging funds besides private equity ? (June, 25 – 2 Marks each)
Q. Write a short note on Angel Fund. (June 23 – 3 Marks)
Q. Write a short note on Municipal Bonds. (June 23 – 3 Marks)
Q. One of the investors wants to invest in the growing real estate market. The entry and exit from the physical real estate is not cost effective and illiquid. Is there any way to invest in real estate like other securities ? State briefly. (June, 24 - 5 marks)
Q. Buying a single share of any company is much riskier, as compared to buying the Exchange Traded Fund (ETF). Explain this statement, with reference to the understanding about ETF. (Dec, 24 – 5 Marks)
Q. What is the option contract ? How the option contract is classified on the basis of party who exercise the option and time at which the option can be exercised? (Dec, 21 – 5 Marks)
Q. (a) What is future contract ?
(b) Akshay buys 500 shares of PQR Limited @ `210 per share on the stock exchange platform. In order to hedge the position, he sells 300 futures of PQR Limited @ `195 each. Due to fall in the share and futures price by 5% and 3% respectively on next day, Akshay closes his position by counter transactions. Find out his profit or loss. (June, 21 – 5 Marks) (2 + 3 Marks)
Q. What are the Option contracts ? You are required to compute the profit/loss for each investors in below option contracts :
Mr. X writes a call option to purchase share at an exercise price of ₹ 60 for a premium of ₹ 12 per share. The share price rises to ₹ 62 by the time the option expires.
Mr. Y buys a put option at an exercise price of ₹ 80 for a premium of ₹ 8.50 per share. The share price falls to ₹ 60 by the time the option expires.
Mr. Z writes a put option at an exercise price of ₹ 80 for a premium of ₹ 11 per share. The price of the share rises to ₹ 96 by the time the option expires.
Mr. XY writes a put option with an exercise price of ₹ 70 for a premium of ₹ 8 per share. The price falls to ₹ 48 by the time the option expires. (June, 19 – 5 Marks)
Q. Eknath, a risk averse investor is planning to take advantage of market rumour that in the upcoming budget, the Government is likely to announce some economic package including production linked incentive (PLI) scheme for auto industries. As he does not like to take higher risk; he purchases one call and put option contract (Lot size 1000 shares) of a leading auto component manufacturing company at a premium of ` 5 and ` 4 respectively with strike price of `105. In the budget, no PLI scheme was declared and the price of stock fell to `90.
Ascertain the net loss/profit.
What would be your answer, if the stock price escalates to `120 as Government slashed GST rate on vehicles? (June, 22 - 5 marks)
Q. Suppose B. Co. Ltd. issues bonds with following terms :
Issue price of Bond `2000
Coupon rate 2% with maturity period of 2 years Convertible into equity shares @ `100 per share
Y has subscribed for 5 bonds and made an investment of `10,000. On maturity date, investor will have an option to either claim full redemption amount or convert the Bonds into equity @ `100 per share. The quoted share price on maturity date is `150. If he goes for conversion how many shares Y will get ? Will it be fair enough if he opts for redemption value ? Calculate which option is best suitable to Y ? (Dec, 21 – 5 Marks)
Q. (i) How does market surveillance try to ensure market integrity in the securities market ? Explain.
Q. What is meant by Block deal ? How is it being executed in the Stock Exchange? (Dec. 18 – 5 Marks)
Q. Maxgrow Ltd. (a listed company) is manufacturing the solar PV modules in India. It is a cash rich company with cash reserve of ₹ 500 crore. It declared a dividend of ₹ 20 per share (face value ₹ 10 each). Before the record date, many mutual fund houses. HNIs and Institutional investors shown interest in the shares of Maxgrow Ltd. through block deal. Ranjan, a shareholder did not receive the dividend declared by the company after the expiry of prescribed period.
Since last two months, there is heavy fluctuation in the price of the shares of Maxgrow Ltd. and with very thin trading volume. The stock exchange based on its surveillance system, took stringent action in the interest of the investors.
Technet Ltd, subsidiary of Maxgrow Ltd. is in the business of data analytics since last two years. It is providing the services to the fortune 500 companies across the world. The management wishes to list its securities with the stock exchange, by floating an IPO.
After analyzing the case study, answer the following (with reasons) :
Is block deal window also open for individual investors ?
What are the timings of executing transaction through block deal window ?
What first course of action is available to the shareholder for default of payment of dividend by the company ?
What types of preventive surveillance restrictions can be imposed by the stock exchance (name any four) ?
Is it possible to list shares for a two year old company in the stock exchnage ?
(June, 24 - 2 marks each)
Q. Centre for Youth Ltd. (CYL) is a section 8 company and operating since last 20 years. Its prime area of activities is to promote education and employability amongst unserved population. Currently the major donations come through advertisement in social media. As the company started providing education towards financial literacy, it needs more funds to cater the growing demand. The management is of the view that as CYL is a not-for-profit entity, it can’t raise funds through open market for fulfilling its objects. You being a SEBI law consultant, advise the management on the below aspects for raising of funds through Social Stock Exchnage (SSE) (with reasons) :
What are the provisions for section 8 company to tap the public fund under SEBI regulations ?
Will it make any difference if CYL is a charitable trust ?
What type of instrument is allowable for CYL for fund raising ?
What will be your answer, if 40% target population is general public ?
If CYL was debarred by Ministry of Home Affairs for carrying out its activities, can it still raise funds through SSE ? (June, 24 - 2 marks each)
Q. What do you mean by FED policy ? Briefly state how change in US fed rate can impact India ? (Dec, 21 - 5 Marks)
Q. What do you know about Market Surveillance? Enumerate different ways of Preventive Surveillance. (Dec, 20 – 5 Marks)
Q. "Prior information of open position of any share during market hours can easily fluctuate the price of the share". How Preventive Surveillance helps to reduce the fraudulent price variation in the shares in a day ? (5 marks)June,2019
Q. Write short notes on the following :
Key difference between WPI & CPI
Basis of SENSEX
High Net Worth Individuals
Bulk Deal. (June, 19 -3 marks each)
Q.. What are the key risk management measures initiated by SEBI in the secondary market ? Describe. (Dec, 19 - 5 marks each)
Q. Write a short note on Nifty. (Dec 23 – 3 Marks)
Q. Write a short note on Block Mechanism in Demat Account. (Dec 23 – 3 Marks)
Q. Write a short note on Currency Derivatives. (June 23 – 3 Marks)
Q. Write a short note on Block Deal. (June 23 – 3 Marks)
Q. A retail investor, Rajesh, invested in a mutual fund scheme but noticed irregularities in the fund’s performance and management. Despite multiple attempts to resolve the issue with the mutual fund company, he receives no satisfactory response. Rajesh decides to approach SEBI’s complaints redressal system (SCORES) for assistance. In light of this, answer the following :
How should Rajesh file a complaint with SEBI ?
What information does Rajesh needs to provide ?
What is the timeline for lodging complaint and one-time Review option ?
Can a complaint in SCORES be filed against a company under liquidation ? If yes, state the procedure. (Dec, 24 - 1+1+1+2=5 marks)
Q. Elaborate the impact of RBI’s monetary policies on Indian economy and stock market. (June, 25 – 5 Marks)
Q. Akilesh, one of the Executive Director of a listed company has violated the provisions of Insider Trading Regulations of SEBI. The Adjudicating Officer has imposed penalty of ₹ 5 Lakh. The Adjudicating officer has imposed penalty of ₹ 5 lakh. The Executive Director did not pay the amount within the stipulated time as stated in the order.
Q. Gelwel Ltd, a Bombay Stock Exchange listed company, received a penalty order [dated 9th September 2024] from the stock exchange for default in compliances on 10th December 2024. Being the Company Secretary of Gelwel Ltd, decide the following situations :
Can Gelwel Ltd. file an appeal against the penalty order, issued by Bombay Stock
Exchange, for default in compliances ?
With whom and within what time period appeal should be filed, if applicable ?
What is the time period, within which such appeals if filed should be disposed off ?
(Dec, 24 - 2+2+1=5 marks)
Q. The stock exchange wants to transfer the duties and functions of a clearing house to a clearing corporation. Is it possible to do so ? Explain the purpose if any, it serves. (Dec, 21 – 4 Marks)
Q. 'A stock exchange on its own can delist any security thereon'. Explain how Recognized Stock Exchange delists any securities listed thereon under Securities Contracts (Regulations) Rules, 1957. (June, 19 - 5 Marks)
Q. ST Ltd. applied for listing of instruments in a recognized stock exchange. However, permission was refused by the stock exchange. Can the company appeal to SAT against such refusal ? Explain. (Dec, 19 – 5 Marks)
Q. “A recognized stock exchange may frame rules/amend rules made by it to provide for all or any of the matters specified therein.” Describe them. (Dec, 19 – 4 Marks)
Q. What are the provisions for continuous listing requirement under Securities Contracts (Regulation) Rules, 1957 ? List any six methods for achieving minimum public shareholding by a listed company. (Dec, 18 – 4 Marks)
Q. Bombay Stock Exchange wants to establish an additional trading floor. Explain briefly the meaning and procedure for establishing an additional trading floor. (Dec 23 – 4 Marks)
Q. Corporates Advisors Ltd. is a listed company. The stock exchange asked certain information about shareholding pattern etc., which the company could not provide even after a further opportunity was given to the company to furnish such information as the company did not maintain the relevant records. What are the penalties leviable against the company under Securities Contracts (Regulation) Act, 1956? Will your answer differ, if the information is sought by the SEBI? (June 23 – 4 Marks)
Q. Shakti is aggrieved by the order of the Securities Appellate Tribunal (SAT) and intend to appeal before appropriate authority/court. Briefly explain the procedure and time limit for filing of appeal. (June 23 – 4 Marks)
Q. Mukharjee holds certain securities on 31st March, 2022, issued in his favour under the ‘‘Collective Investment Scheme (CIS)’’, for consideration, Mukharjee transferred the said securities in favour of another person. One month after the date on which the income on these securities become due, the transferee lodged the instrument of transfer. Decide in the light of the provisions of the Securities Contracts (Regulation) Act, 1956.
Whether in the given case, Mukharjee is entitled to receive and retain the income on these securities for the financial year ended 31st March, 2022?
What would be your answer in case the transferee lodged the instrument of transfer 10 days after the date on which the income on these securities became due?
[Dec 23 – 5 (2+3) Marks]
Q. The Old Age Regional Stock Exchange (OARSE), once a vital financial hub, had gradually lost its significance in the face of a rapidly evolving financial market. Established decades ago, OARSE initially served a broad spectrum of investors and businesses. However, with the emergence of national-level stock exchanges and technological advancements, OARSE struggled to keep pace with modern regulatory and operational standards.
During the year 2023-24, SEBI conducted a thorough review of OARSE’s operations to assess its adherence to newly established regulations. The review revealed several deficiencies in OARSE’s trading practices and compliance measures. When SEBI requested detailed information regarding these areas, OARSE failed to provide adequate responses, demonstrating significant lapses in its management and operational framework. As a result, SEBI decided to derecognize OARSE, effectively preventing it from functioning as a stock exchange. This decision highlighted the importance of compliance, technological adaptation, and transparency for the survival of regional exchanges in the competitive financial landscape.
With reference to the above case study, answer the following :
What will be the procedure followed by SEBI for withdrawal of recognition of OARSE ?
Will the contracts entered by OARSE before the date of withdrawal of recognition be valid ?
Who all are bound at OARSE to produce documents sought by SEBI ?
What are the provisions relating to the maintain and preserve books of accounts and other documents by any Recognised Stock Exchange in India ?
Can business of any Recognised Stock Exchange be suspended ? (Dec, 24 – 2 Marks each)
Q. List down the powers Central Government enjoying under the Securities Contracts (Regulation) Act, 1956 and the Rules and Regulations made thereafter. (June, 25 – 5 Marks)
Q. SEBI has been given necessary autonomy and authority to regulate and develop an orderly market. Elucidate the statement in the light of statutory powers vested with SEBI. (June, 19 – 4 Marks)
Q. “SEBI may take any of the measures either pending investigation or inquiry or on completion of such investigation.”
Enumerate such measures in the light of the provisions of the SEBI Act. (Dec, 20 – 4 Marks)
Q. Under what circumstances and how the recovery officer will proceed to recover the amount of penalty etc. imposed by adjudicating officer under the SEBI Act, 1992 ? (June, 21 – 4 Marks)
Q. Hon’ble Justice A, a retired Chief Justice of a High Court, attained the age 62 years on December 31, 2017. The Central Government had appointed him as the Presiding Officer of the Securities Appellate Tribunal (SAT) with effect from January 1, 2018. You are required to state with reference to SEBI Act, 1992,
(a) the term for which he may be appointed as Presiding Officer of the SAT
(b) Whether he can be re-appointed as such and remains as Presiding Officer of the Securities Appellate Tribunal ? (Dec, 18 – 4 Marks)
Q. Lalji, aggrieved by an order passed by SEBI is desirous of making an appeal before SAT. He requested you as a consultant to prepare a note to know the appeal procedure. (Dec, 19 – 4 Marks)
Q. M/s. XYZ company Ltd. aggrieved by the decision of Adjudicating Officer under the SEBI Act, 1992 moved to civil court to contest the case. Is the action of the company correct in light of SEBI provisions ? Give your views and suggest to the management the action to be initiated by XYZ Ltd. (Dec, 21 - 4 Marks)
Q. Hon’ble Justice Z, a retired Chief Justice of a High Court, attained the age of 64 years on 31st December, 2022. The Central Government had appointed him as the Presiding Officer of the Securities Appellate Tribunal (SAT) with effect from 1st January, 2023. You are required to state with reference to SEBI Act,1992 :
The term for which he may be appointed as Presiding Officer of the SAT.
Whether he can be re-appointed as such and remains as Presiding Officer of the Securities Appellate Tribunal.
(Dec 23 – 4 Marks)
Q. RNP Financial Services Limited is registered with SEBI as a merchant banker for providing various capital market services to its clients, including managernent of public issues, underwriting, etc. With recent changes in its top management, new leadership being more ambitious did not give due importance to the regulatory compliances and more focused on business expansion. As a result, team did lot of non-compliances. One of their old client, made this complaint with the SEBI. As a result, SEBI conducted their internal enquiry and observed that RNP Financial Services Limited has continuously violating various rules and regulations applicable to merchant bankers. Accordingly, SEBI issued formal show cause notice. But, the new management made couple of false and misleading submissions to SEBI. As a result, SEBI carried out a full-fledge investigation into the affairs of RNP Financial Services Limited by appointing an appropriate Investigating Authority. During the course of investigation, authority appointed by SEBI has also seized various records and books of the company.
In the context of Securities and Exchange Board of India Act, 1992 and the various rules &
regulations made thereunder, answer the following :
What are the powers of SEBI with regard to issue of directions to an intermediary ?
What are the grounds on which SEBI can conduct an investigation into the affairs of the intermediary ?
What are the powers of the Investigating Authority in the case ?
If penalty is imposed on RNP Financial Services Limited, what factors should be taken into account by SEBI or Adjudicating Officer while adjudging the quantum of penalty ?
When and how the Investigating Authority should return the seized records of RNP Financial Services Limited ? (June, 25 – 2 Marks each)
Q. Explain the following:
Dematerialization
Fungibility. (Dec, 18 – 4 Marks)
Q. Rohit is a regular investor in the market, electronically holding one thousand equity shares with special voting right shares of Growmore Ltd. He made a request for rematerialisation of his shares to the Company. Rohit also wanted to know, after how many days of rematerialisation, he can trade his shares. As the Company Secretary of Growmore Ltd, explain the meaning of rematerialisation, procedure to be followed for remat and tradability postremat. (Dec, 24 – 5 Marks)
Q. Under the provisions of the Depositories Act, 1996, a depository is the registered owner for the purpose of effecting transfer of ownership of security; but it is the beneficial owner who owns or has control over the legal entity. What is a ‘beneficial owner’ and ‘depository’ under the provisions of the Depositories Act, 1996 ? What are the rights available to a beneficial owner? (June, 25 – 2 + 3 Marks)
Q. You have been recently appointed as the Company Secretary in S.K. Limited. One of the youngest Board members wanted to understand from you–what Role a Company Secretary may have, under the Laws Governing to Depositories and Depository Participants ? Explain in detail. (June, 25 – 5 Marks)
Q. As a company secretary, you are required to advise on the following issues :
Can a foreign bank, operating in India, be registered as a depository participant ?
Manoj Soni, a lawyer by profession, has a Demat account with a scheduled commercial bank but he wants to open another account with another depository participant. Can he do so ?
Manmohan Reddy holds shares of XYZ Pvt. Ltd. in Demat Form. Advise how he would get the right issue shares ?
Are debt instruments viz; debentures and commercial papers available for Demat at the Depository ?
(June, 24 - 1+1+1+2=5 marks)
Q. Ratina Ltd., a listed company has to submit the audit report to the Stock exchange under SEBI (Depositories and Participants) Regulations, 2018. You being a practicing company secretary narrate the activities to be covered in the Audit Report. (Dec, 21 – 5 Marks)
Q. Briefly explain the procedures followed by the Depository Participants with regard to issuance of Delivery Instruction Slips (DIS) and verification of the same. (June, 21 – 4 Marks)
Q. “The holding of securities in dematerialise form is not mandatory”. Explain the relevant provisions with reference to the Depositories Act. (Dec, 20 – 4 Marks)
Q. Due to rapid surge of Initial Public Offers in the primary market, the participation of retail investors in the market has also increased substantially. To tap this opportunity, XYZ Ltd. is planning to start the depository services. Narrate in brief, the eligibility conditions for rendering of depository services. (Dec, 22 – 4 Marks)
Q. What is concurrent audit? Explain its scope with respect to issuance of DIS and verification of DIS. (Dec 23 – 5 Marks)
Q. What do you know about Dematerialisation? What is the procedure for Dematerialisation? (June 23 – 5 Marks)
Q. The capital market intermediaries are vital link between investor, issuer and regulator. Elaborate the concept, with the help of objectives of intermediaries. (June, 25 – 5 Marks)
Q. The certificate granted by the SEBI to an intermediary is subject to certain conditions. Elaborate the conditions and state the period of validity of certificate. (Dec, 22 – 5 Marks)
Q. What do you mean by discretionary portfolio manager ? How portfolio manager plays a pivotal role in deciding the best investment plan for an individual ? (Dec, 21 – 5 Marks)
Q. Your company has been appointed as a Banker to an issue by ABC Limited. Elaborate, who can be appointed as a Banker to an issue under SEBI (Bankers to an Issue) Regulations, 1994, and what are the activities they are authorised to do? (June, 25 – 5 Marks)
Q. Write short note on an investment advisor. Explain in brief the general obligations and responsibilities of investment advisors. (June, 24 – 5 Marks)
Q. Write short notes on the following :
Duties Debenture Trustee
Foreign Portfolio Investor (3 marks each) (June,2021)
‘Debenture Trustee’ means a trustee appointed in respect of any issue of debentures of a body corporate.
It shall be the duty of every debenture trustee to-
satisfy itself that the prospectus or letter of offer does not contain any matter which is inconsistent with the terms of the issue of debentures or with the trust deed;
satisfy itself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders;
call for periodical status/performance reports from the issuer company within 7 days of the relevant board meeting or within 45 days of the respective quarter whichever is earlier;
communicate promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee therefor;
call for reports on the utilization of funds raised by the issue of debentures;
Take possession of trust property in accordance with the provisions of the trust deed;
Exercise due diligence to ensure compliance by the body corporate with the provisions of the Companies Act, the listing agreement of the stock exchange or the trust deed
To take appropriate measures for protecting the interest of the debenture holders as soon as any breach of the trust deed or law comes to his notice.
To ascertain that the debentures have been converted or redeemed in accordance with the provisions and conditions under which they are offered to the debenture holders.
Inform the SEBI immediately of any breach of trust deed or provision of any law.
Appoint a nominee director on the board of the body corporate when required.
Q. What do you mean by 'Research Analysts' ? Elucidate the net worth requirements, and role and responsibilities of Research Analyst as per SEBI (Research Analyst) Regulations, 2014. (5 Marks) (June.2019)
Q. Write short notes on the following :
Custodian of Securities (3 Marks)June.2019
Q. Dhruv has purchased 1000 shares @ `80 per share of a company. He wanted to pay `5,000 in cash and balance through bank transfer to stock broker. As a Company Secretary advise Dhruv by referring SEBI regulation/circular.
Q. Write short notes on the following :
Role of Portfolio Manager
Research Analysts. (3 marks each)Dec.2019
Q. Distinguish between the following :
Contract of Indemnity and Guarantee (3 Marks)Dec.2018
Q. All the registered merchant bankers are hereby advised to disclose on their website. Elucidate the investor charter to be published or disclosed by the merchant banker. (Dec 23 – 5 Marks)
Q. Write a short note on Custodial services. (Dec 23 – 3 Marks)
Q. Write a short note on Co-investment Portfolio Manager. (Dec 23 – 3 Marks)
Q. Write a short note on Qualified stock broker. (Dec 23 – 3 Marks)
Q. Explain the effect of refusal to grant certificate to an intermediary. (Dec 23 – 5 Marks)
Q. What do you mean by Capital Market Intermediaries? What are the different kinds and general obligations of Capital Market Intermediaries? (June 23 – 5 Marks)
Q. Registrars and Share transfer Agents (RTA) ease the burden of a listed entity on day-to-day resolution of matters pertaining to the securities. State in brief, the pre and post issue activities performed by an RTA. (June, 24 – 5 Marks)
Q. Write a short note on Appointment of compliance officer by intermediaries. (June 23 – 3 Marks)
Q. What is Debenture Trustee? When is the appointment of Debenture Trustee mandatory? What conditions a company has to comply for the appointment of Debenture Trustee? What is the eligibility for being a Debenture Trustee? (June 23 – 5 Marks)
Q. What are Credit Rating Agencies ? What is the minimum net worth requirement for Credit Rating Agencies ? Explain in brief the general obligations of Credit Rating Agencies. (Dec, 24 – 5 Marks)
Q. Green Tech Solutions, is a Tech Start-up Company. It develops eco-friendly energy storage systems. Founded in 2022, it promoters are focused on products relating to sustainable technology to reduce carbon footprints in urban areas, seeking to revolutionize green energy. This company wishes to list on the recognised stock exchanges in IFSC. Considering these facts :
(a) State the criteria for listing of Start-up companies on recognised stock exchanges in IFSC.
(b) State the salient features related to Direct Listing and Minimum Subscription.
(Dec, 24 - 3+2=5 marks)
Q. The IFSCA (Issuance and Listing of Securities) Regulations, 2021 allowed a company incorporated in a foreign jurisdiction to list its securities in India. In this context, state the type of listing and eligibility criterion. (June, 24 – 5 Marks)
Q. What are the benefits of International Financial Service Centre for India?
Q. After establishing the Gujarat International Finance Tech-city SEZ as India’s maiden International Financial Services Centre, how does it boost the Indian economy? (June, 25 – 5 Marks)
Q. You have been appointed as Company Secretary of SkyBlue Limited, a Special Purpose Acquisition Company. This company is in the process of issuing Specified Security under Section 23(3) of the Companies Act, 2013 through an IPO, and get them listed with an IFSC recognised stock exchange. Please advise the following :
Is SkyBlue Limited eligible to issue such an IPO ? If ‘Yes’ - under what conditions, and if ‘No’ – why ? (2 Marks)
What should be the offer size, and how much percentage the sponsors should minimum hold ? (1 Mark)
What should be the minimum application size ? (1 Mark)
What should be the acquisition time line ? (1 Mark) (June, 25)
Q. Differentiate between Initial Public Offer (IPO) and Further Public Offer (FPO). Which entities are not entitled to make an Initial Public Offer (IPO). (Dec, 24 – 5 Marks)
Q. Exotica venture capital fund (leading foreign fund house) had invested in a startup company & qualified as promoter. The company is willing to come up with Initial Public Offer. Exotica fund is thinking of selling its entire shareholding just after the listing of shares. Advise the Exotica fund by referring SEBI regulations for lock-in period of pre-issue shareholding. What will be your answer, if the majority of the IPO proceeds is used for capital expenditure ? (June, 24 – 5 Marks)
Q. Rajesh, is an ace investors in the primary capital market. Due to rising response of High net- worth individual investors in the IPO market, the non-institutional quota generally subscribed multifold, thus very few chances remain to get allotment in the non-institutional category. State by quoting the SEBI provisions, the application sizes under the non-institutional category and how and when he gets more chances for shares allotment. (June, 24 – 5 Marks)
Q. ABC Company Ltd. had issued 2000 equity shares of ₹ 80 each with attachable warrant on 20th June, 2018. The warrant can be exchanged in equity in the proportion of 1:1. S, a shareholder who was allotted 200 equity shares with attachable warrant on 20th June, 2018 wants to know the warrant premium if the market value of warrant is ₹ 18 and exercise price is ₹ 70.
Calculate the warrant premium for S.
What are the conditions of eligibility of ABC Company Ltd to issue Warrant?
When ABC Company can forfeit the warrant ? (Dec, 21 - 2+2+1=5 marks)
Q. Turnkey Ltd. is a listed company, manufacturing auto ancillary components. One of the director of the company is a fugitive offender. The company wants to bring Further Public Offer (FPO). You being the company secretary of the company, advise whether the company can issue FPO. State the general conditions and the eligibility requirements for FPO under SEBI Regulations. (Dec, 21 – 8 Marks)
Q. Actnow Edge Limited, an unlisted company, is in the process of expanding its business. For expansion, it needs funds of `200 crore. For raising `200 crore, company has decided to bring an initial public offer through book building mechanism. It has fixed a price band of `500 – `600. Referring to provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, advise the company on the following matters :
What should be minimum application value and minimum number of equity shares in one application ?
What will be minimum sum payable on application ?
What should be minimum time period for which issue should remain open for subscription ? (June, 21 – 5 Marks)
Q. Good Luck Finance Ltd., a listed company issued 20 lakh equity shares of `180 each. The Company provided Green Shoe Option and Nishan was nominated as Stabilising Agent. On the date of listing, Corona Virus threat spread across the globe. Consequently post listing, the share price of the company fall to `150.
From the above :
Compute the quantum of shares that can be bought by Nishan.
State the provisions for balance of shares lying in the special account for Green Shoe Option. (June, 21 – 5 Marks)
Q. ABC Limited, a public company, has come with public issue of 15,00,000 equity shares through a book building process. The price band is `500 - `600. The following table shows demand of securities at various price levels. What should be the cut-off price as per book building mechanism? (June, 21 – 5 Marks)
Q. Hope Ltd. makes an issue worth `125 crore to the public, out of which `20 crore was for sale to existing shareholders. Explain the provisions regarding the utilisation of proceeds and state whether any exception is available. (Dec, 20 – 5 Marks)
Q. Govind Ltd. proposes to issue 20 lakh share warrants to its promotors. The share warrant gives an option to buy shares at a predetermined price. The price trend of the Company’s share in the stock market is given below:
Closing price on the relevant date: `250.
The average weekly high and low of the closing price during the 26 weeks preceding to the relevant date: `275.
The average weekly high and low of the closing price during the 2 weeks preceding to the relevant date: `280.
You are required to:
Identify the minimum price at which share warrants should be issued; and
Calculate the amount payable by the promoters at the time of allotment of the warrants. (Dec, 20 – 4 Marks)
Q. RP Ltd. is planning to issue an IPO in 2019 for which a draft offer document is proposed to be filed in September, 2019. The following data is available regarding the company:
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Advice the company whether they can proceed with the IPO
Will your answer be different if value of monetary assets is ` 4 crore in 2016-17?
How will you deal with the situation, if company has monetary assets of ` 5 crore in the year 2017-18 ? (Dec, 20 – 5 Marks)
Q. Raman Ltd. issued 50 Lakh equity shares at a price of `200 per share. The company provided Green Shoe Option for stabilizing the post listing price of the shares. The issue was oversubscribed and it was decided that stabilizing agent would borrow maximum number of shares permitted by SEBI (ICDR) regulations. Due to rise in price during Green Shoe Option period, only 5 Lakh shares could be bought back at the price of `180. You are required to :
Calculate the number of shares that the stabilizing agent needs to borrow in this case at the time of allotment and explain the same with relevant provisions.
Explain the responsibility of Issuer Company in the above case with respect to shortfall while exercising Green Shoe Option.
Calculate the amount if any, to be transferred to Investor Protection and Education Fund. (Dec, 20 – 5 Marks)
Q. After the Initial Public Offer, the equity capital of promoters group holding in a listed company is ₹ 140 crore. The post issue equity capital of the company is
₹ 600 crore. The promoters group holding includes (acquired during previous year) :
₹ 20 crore equity capital allotted in consideration of transfer of Technical know how by the promoters.
₹ 10 crore equity capital pledged with bank.
Whether the promoters group is satisfying minimum promoters contribution requirement as per SEBI regulation ? Explain. (Dec, 19 – 5 Marks)
Q. PBR Ltd. is a toy manufacturing listed company with its head office in Jaipur, Rajasthan. PBR Ltd. wishes to issue Further Public Offer (FPO). It has changed its name in the last one year immediately preceding the date of filing the documents for FPO. Being a Company law consultant, advise the management for eligibility for issue of FPO and lock-in period requirements for promoters’ holding, which is in excess of minimum promoters’ contribution. (June, 24 – 5 Marks)
Q. A company is planning for Initial Public Offer of its equity shares. It has decided differential pricing for retail individual investors (RII) and QIBs and Non- Institutional Investors (NIIs). The proposed price for RII is `250 and for QIB and NII is `300. Examine the validity of proposal of the company in light of SEBI regulations. What will be your answer if company is proposing `280 to anchor investors in book building issue ? Explain. (Dec, 19 – 4 Marks)
Q. Harish Ltd. and Monish Ltd. are planning to float an IPO in March 2025 worth ₹ 600 crore and 500 crore respectively. Harish Ltd. is a pharmaceutial company and incorporated five years ago and is satisfying the conditions of regulation 6(1) of the SEBI (ICDR) Regulations 2018. Monish Ltd. is a start-up, engaged in the business of Organic farming technology and is operational since last two years. Many private equity players have already invested in the company and planning to sell their holding during the IPO. Calculate, the maximum permissible allotment to an anchor investor by both companies (assuming face value of ₹ 10 in each case). (June, 24 – 5 Marks)
Q. M/s Highspeed Ltd. manufacturing a car components for leading car manufacturer. Its public issue of `500 crore was fully subscribed. The public issue money ought to be utilized for setup an assembly-line for the existing business. Out of `500 crore, the company spent `400 crore for assembly-line. The management consultant, hired for Business Process re-engineering has suggested to invest balance amount to setup bike components manufacturing unit. You, being company secretary of the company, advise on the opinion of management consultant by referring provisions of SEBI Guidelines. (June, 19 – 4 Marks)
Q. The financial data of Natural Energy Limited as on 31st March, 2018 are as under :
Authorised Share Capital : `700 crore
Paid-up Capital : `300 crore
Free Reserves : `800 crore
The company has pending convertible debenture of `150 crore, due for conversion in financial year 2018-19. The company proposes to issue bonus shares in the ratio of 1 : 1 after conversion of debenture. You being a company secretary, advise on the procedure to be followed by referring SEBI regulations. (June, 19 – 7 Marks)
Q. Girdhar (Retail Individual Investor) had applied for Initial Public Offer of Six Sigma Ltd. through Applications Supported By Block Amount (ASBA) process. The Self Certified Syndicate Banks (SCSBs) failed to make bids in the StockExchange system even after the amount has been blocked. The issue was oversubscribed. Based on the SEBI guidelines/circulars, answer the following :
What are the factors that have been taken into account by SEBI for finalization of uniform policy for calculation of the minimum fair compensation?
Calculate the minimum fair compensation payable to Girdhar based on the following information : Listing Price : `350, Issue Price : `300, Minimum Bid lot-20 shares, probability of allotment of shares on the basis of allotment (ratio 7 : 8). (Dec, 18 – 4 Marks)
Q. Define “Dissenting shareholders”. What are the conditions for applicability of Exit offers by dissenting shareholders according to SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ? (Dec, 18 – 4 Marks)
Q. Technopoly Ltd., an unlisted public company, having a paid up equity share capital of `3.00 crore consisting of 30,00,000 equity shares of `10 each fully paid up, proposes to reduce the denomination of equity shares to less than `10 per share and make the initial public offer of equity shares at a premium. Whether it is possible for the company to issue shares at a denomination of less than
`10 ? Based on the above facts, you are required to state the minimum issue price, with reference to the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. (Dec, 18 – 5 Marks)
Q. Startups companies have now come up with an Initial Public offer with relaxation of many conditions applicable for Initial Public Offer. In this context, briefly, explain about the “Institutional Trading Platform (ITP)” and eligibility for listing. (Dec, 18 – 5 Marks)
Q. You have been newly appointed SEBI consultant, for Techno AVR Ltd. This is a fintech Start- up company incorporated in 2010 under the Companies Act 1956. Their management, is seeking to list the company on the BSE SME platform. So, please advise the following :
Can Techno AVR Ltd. get listed at BSE SME Platform ?
What should be the tangible assets of Techno AVR for this listing ?
What should be post issue paid up capital of Techno AVR Ltd ?
Is it compulsory for Techno AVR Ltd. to facilitate trading of securities in demat form, or also in physical form ?
Techno AVR Ltd. has changed its promoters about ten month preceding the date of filing the listing application with the BSE. Does this have any impact its listing ? (Dec, 24 – 5 Marks)
Q. TechGlobal Corp is a multinational technology company, it decided to acquire a significant stake in a promising Indian start-up, RecreateX Ltd, but it is a listed company with NSE. To avoid market disruption and potential price fluctuations, TechGlobal and RecreateX negotiated and entered into a bulk deal.
The transaction involves TechGlobal purchasing 50% of RecreateX’s equity shares. This transaction includes, shareholding held by one of its shareholder Mr. X as 5% and another shareholder Mr. Y as 0.5% of RecreateX’s total outstanding shares.
The brokering Firm, ABC Ltd. facilitated the transaction. But once the deal was completed, ABC Ltd. failed to report the details to the National Stock Exchange (NSE), where RecreateX’s shares are listed. Under these scenarios, answer the following :
Is these three transactions [50% including 5% and 0.5%] constitutes a bulk deal on a stock exchange ?
What is the reporting timing, when a bulk deal happens through a single trade or multiple trades ?
Who is required to disclose the details of a bulk deal to the stock exchange ? (2+2+1=5 marks)
Q. What is meant by Anchor Investor ? What are the limitations of allocation to anchor investors in the Book building process ? (Dec, 18 – 5 Marks)
Q. A listed company, Nishan Hitech Ltd. issued 10 lakh equity shares at a price of
`150 per share. The company provided Green shoe option for stabilizing the post listing price of the shares. On the day of listing of shares, the news of trade war between the two developed countries flashes and the price of shares of company fall to `110. Decide how many shares can be purchased by the stabilizing agent to control the price ? State the provisions for balance money lying in the special account for green shoe option. (Dec, 18 – 5 Marks)
Q. The facility of Application supported by Blocked Amount (ASBA) introduced to protect the interest of investors for faster refund. SEBI has provided additional channels for making subscription and/or call money in respect of partly paid specified securities. Explain. (June, 22 – 4 Marks)
Q. A company is planning for Initial Public Offer of its equity shares. It has decided differential pricing for retail individual investors vis-à-vis QIBs. The proposed price for retail individual investors is ₹ 250 and for QIB is ₹ 300. Examine the validity of proposal of the company under SEBI Regulations. What will be your answer, if the company proposes ₹ 280 to anchor investors in book building issue? (June, 22 – 5 Marks)
Q. What are the amended allocation criterion in the non-institutional investors category, if an issue is made through book-building process ? (Dec, 22 – 4 Marks)
Q. State with reasons whether the companies are allowed to make public issue under SEBI (ICDR) Regulations, 2018.
Jain, a promoter of XY Ltd. is categorized as a willful defaulter by SBI in accordance with the guidelines issued by the RBI. The company requires funds for its business expansion and plans to make IPO.
Sinha is one of the Board of Directors of VG Garments Ltd., against whom a warrant for arrest in relation to a Scheduled offence has been issued by the Court. Sinha left India to keep off criminal prosecution and refused to return to India.
(Dec 23 – 4 Marks)
Q. Whether these entities are eligible or not to make initial public offer? Answer with reasons in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
The promoters’ group was earlier debarred from accessing the capital market by the SEBI and the period of debarment is already over on the date of filing of the DRHP with the SEBI.
Recently, one of the promoter is declared as wilful fugitive offender.
The issuer has changed the name in the last one year and earned 40% of the revenue for the preceding one full year from the activity in the new name.
The issuer has a net worth of one crore and fifty lakh rupees in each of the preceding three years, calculated on a restated and consolidated basis.
The issuer has an average operating profit of ₹ 10 crore during the three preceding years, with operating profit in each of the preceding three years.
(June 23 – 5 Marks)
Q. List down the institutions recognised as Qualified Institutional Buyer under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. (Dec, 24 - 5 marks)
Q. Write Short Note on the following :
Entities not eligible for Right Issue (June, 25 – 3 Marks)
Q. The Board of Directors of XYZ Limited are in the process of finalizing their policy relating to Sweat Equity and Share based Employee Benefits. Therefore, before this policy being adopted by the Board, Managing Director wants to understand the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as applicable to General Employee Benefit Scheme (GEBS) and Retirement Benefit Scheme (RBS). Being Company Secretary, you are being instructed to explain the above in detail. (June, 25 – 5 Marks)
Q. Explain the provisions of pricing, vesting period and consequence of failure to exercise Employee Stock Option Scheme (ESOS). (Dec, 21 - 4 Marks)
Q. “SEBI Share Based Employee Benefits Regulations shall apply to any company, whether listed or not on any recognised stock exchanges in India and has a scheme”. Comment on the statement. Discuss the scheme or purpose of the regulation. (Dec, 21 -4 Marks)
Q. Tango Trading Ltd. is a public company which has its equity shares listed on NSE. The Company wants to implement Employee Stock Option Plan (ESOP) for its employees. ESOP Plan will be operated through a trust in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The company is willing to issue shares under ESOP scheme to one of its whole time director, Irfan. Irfan holds 12% of the outstanding equity shares of the company. In view of the above facts, answer the following questions :
Can the company issue shares to its director, Irfan under ESOP scheme ?
Prepare a brief note on the process of implementation of ESOP scheme through Trust route. (Dec, 20 – 4 Marks)
Q. Your Board of directors is contemplating to take-up the agenda to issue ESOS in next meeting. Being a Company Secretary, advise your Board of directors about brief procedure for issuing of securities under SEBI Employees Stock Option Scheme (ESOS) by a listed Company. (June, 19 – 5 Marks)
Q. Yale is a nominee director on the Board of a listed company. On the proposal of ESOP in the Board meeting, he objected about his exclusion from this scheme. State the prior conditions to be fulfilled for a nominee directors under the SEBI regulations for ESOP eligibility. (Dec, 19 – 5 Marks)
Q. A company has implemented Employee Stock Option Scheme to retain the best talent in the company. After one year of implementation of the scheme, the company desires to increase the vesting period from 2 year to 3 year. Is it possible for the company to vary the terms and condition of the option after implementation of the scheme under SEBI regulation. (Dec, 19 – 5 Marks)
Q. Explain the Stock Appreciation Rights Scheme (SARS). (Dec, 18 – 5 Marks)
Q. Answer the following with reference to the Companies (Share Capital and Debentures) Rules, 2014, as to whether these are the eligible employees under Employee Stock Option ? (Yes/No with reasons)
Ankit is a permanent employee deputed in USA for a specific project.
Smart Ltd. is an independent company.
Anil is a promoter and employee.
Aneesh is a director holding 11% of outstanding equity shares of the company.
If it is a startup company, will the situation be the same in (iii) & (iv) above? (Dec, 18 – 5 Marks)
Q. MineGame Ltd., a gaming platform of a listed company comprises various subsidiaries, join venture companies, associates and other related party entities forming an internal part of MineGame Group. In order to retain talented human resources and to recognize the efforts of employees of these entities in the group, MineGame Group decided to grant cash based SARs linked to the share of MineGame Group to the employees of joint venture. You are required to confirm as to whether the scheme falls under the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. (June, 22 – 5 Marks)
Q. The Shares issued after Initial Public Offering (IPO) of an unlisted company, out of options or SAR granted under any scheme prior to its IPO to its employees shall be listed immediately on exercise upon the options in all the recognized stock exchange. However, the shares of the company are already listed subject to compliance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. You are required to explain the compliances and conditions for the same. (June, 22 – 4 Marks)
Q. Due to growing numbers of startups in India, one of the leading listed startup has apprehension that the experienced employees may leave the company to get higher pay package. The CEO desires to issue Sweat Equity Shares to the employees to retain them.
You being a Company Secretary advise the management about pricing of the shares under SEB (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. (June, 22 – 4 Marks)
Q. Due to growing number of startups in India, one of the leading listed startup has apprehension that the experienced employees may leave the company to get higher pay package. The CEO desires to issue Sweat Equity Shares to the employees to retain them.
Q. “The accounting treatment of an issue of sweat equity shares is different than the public offer of shares.” Elucidate briefly. Is there any requirement of Auditor’s certificate after issue of sweat equity shares ? When such shares are treated as part of managerial remuneration ? (Dec, 21 -7 Marks)
Q. Portable Marketing Ltd., a listed company on stock exchange, having paid up capital `500 crore consisting of 50 crore equity share of `10 each. The Board of directors of company has recommended issuing of sweat equity shares to its promoters/directors and employees as a part of their recognition for valuable contribution to the growth of company. The board meeting was held on 1st March, 2020 and extra-ordinary general meeting was held on 27th March, 2020 for approving the issue of sweat equity shares. The details of closing market price available on stock exchange are given below :
| the 90 trading days’ volume weighted average price of the related equity shares quoted on the recognised stock exchange | preceding 31st January, 2020 | `540 |
|---|---|---|
preceding 26th February, 2020 |
`550 | |
| the 10 trading days’ volume weighted average prices of the related equity shares quoted on a recognised stock exchange | preceding the 31st January, 2020 | `580 |
| preceding the 26th February, 2020 | `575 | |
| The closing price of equity share of the company | on 27th March, 2020 | `578 |
Referring to the provisions of Companies Act, 2013 and SEBI Regulations, answer the following :
What are the conditions to be fulfilled for issue of sweat equity shares ?
Can sweat equity shares be issued to promoters ? If yes, what are the conditions to be fulfilled ?
What is the relevant date in above case ?
What should be the minimum price at which sweat equity shares should be issued ? (June, 21 – 8 Marks)
Q. Z Ltd. has issued Sweat Equity Shares for a non-cash consideration. What are the possible accounting treatments in the books of Z Ltd.? (June, 19 – 4 Marks)
Q. A listed NBFC has been granted licence to run as small finance bank by the Reserve Bank of India under recently announced policy to improve the financial inclusion of the country. During the last three years, the attrition rate for top level management employees was not too high As, RBI has granted licences to many small banks, therefore, the promoters of the Bank feels that attrition rate will be high in coming . period. The Board of directors wishes to allot Sweat Equity shares to employees. You, being compliance officer of the Bank, advise the Board about pricing of the Sweat Equity shares. (June, 19 – 5 Marks)
Q. Samrudhi Enterprises Ltd. established a Trust. The Trust holds some shares of the company obtained by it for the purpose of implementation of Share Based Employee Benefit Scheme in the company. Answer the following in the light of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021:
In what manner the shares held by the Trust will be disclosed to the stock exchange?
Can shares held by the Trust be included in the category of public holding?
(Dec 23 – 4 Marks)
Q. State with reasons whether the following persons can be appointed as ‘Trustee’ of Joe Pharma Ltd., a listed company, which has proposed to implement Share Based Employee Benefit Schemes :
Excellent Consultants Ltd. is holding 9% of paid-up capital in the company.
Karnatak Bank Securities Ltd. has been one of the leading promoters of the company.
(Dec 23 – 4 Marks)
Q. Due to growing number of startups in India, one of the leading listed startup has apprehension that the experienced employees may leave the company to get higher pay package. The CEO desires to issue Sweat Equity Shares to the employees to retain them.
Q. “The accounting treatment of an issue of sweat equity shares is different than the public offer of shares.” Elucidate briefly. Is there any requirement of Auditor’s certificate after issue of sweat equity shares ? When such shares are treated as part of managerial remuneration ? (Dec, 21 -7 Marks)
Q. Portable Marketing Ltd., a listed company on stock exchange, having paid up capital `500 crore consisting of 50 crore equity share of `10 each. The Board of directors of company has recommended issuing of sweat equity shares to its promoters/directors and employees as a part of their recognition for valuable contribution to the growth of company. The board meeting was held on 1st March, 2020 and extra-ordinary general meeting was held on 27th March, 2020 for approving the issue of sweat equity shares. The details of closing market price available on stock exchange are given below :
| the 90 trading days’ volume weighted average price of the related equity shares quoted on the recognised stock exchange | preceding 31st January, 2020 | `540 |
|---|---|---|
preceding 26th February, 2020 |
`550 | |
| the 10 trading days’ volume weighted average prices of the related equity shares quoted on a recognised stock exchange | preceding the 31st January, 2020 | `580 |
| preceding the 26th February, 2020 | `575 | |
| The closing price of equity share of the company | on 27th March, 2020 | `578 |
Referring to the provisions of Companies Act, 2013 and SEBI Regulations, answer the following :
What are the conditions to be fulfilled for issue of sweat equity shares ?
Can sweat equity shares be issued to promoters ? If yes, what are the conditions to be fulfilled ?
What is the relevant date in above case ?
What should be the minimum price at which sweat equity shares should be issued ? (June, 21 – 8 Marks)
Q. Z Ltd. has issued Sweat Equity Shares for a non-cash consideration. What are the possible accounting treatments in the books of Z Ltd.? (June, 19 – 4 Marks)
Q. A listed NBFC has been granted licence to run as small finance bank by the Reserve Bank of India under recently announced policy to improve the financial inclusion of the country. During the last three years, the attrition rate for top level management employees was not too high As, RBI has granted licences to many small banks, therefore, the promoters of the Bank feels that attrition rate will be high in coming . period. The Board of directors wishes to allot Sweat Equity shares to employees. You, being compliance officer of the Bank, advise the Board about pricing of the Sweat Equity shares. (June, 19 – 5 Marks)
Q. Elucidate the obligations of the Company under the SEBI (Issue of Sweat Equity) Regulations, 2002. (Dec 23 – 4 Marks)
Q. Prikshit is appointed as an independent director on the Board of PQR Ltd. The Company has issued ESOPs to Prikshit deeming him to be its employee. Answer the following:
Whether Prikshit is entitled to receive the ESOPs (give reason) ?
What would be your answer, if Prikshit is a non-executive director belongs to the promoters group and holds 12% outstanding equity shares of the company?
(June 23 – 4 Marks)
Q. PQR Ltd. is a pharmaceutical company, whose equity shares are listed on BSE. Company management wish to issue sweat equity shares in accordance with provisions of the Companies Act, 2013. As a company secretary of PQR Ltd. you are required to advise its management on the following :
Maximum quantum of sweat equity shares
Pricing of sweat equity shares
Ceiling on managerial remunerations. (Dec, 24 - 2+1+2=5 marks)
Q. Sanaya Ltd. (a listed company) wants to implement Sweat Equity shares scheme for its employees. The company is also willing to issue shares under the scheme to one its whole- time director ‘Jeevan’. Jeevan holds 21% of the outstanding equity share of the company. Whether the company can issue Sweat Equity shares to Jeevan ? What type of information to be disclosed to the stock exchange after issue of Sweat Equity shares ? (June, 24 – 5 Marks)
Q. Global Air Limited, is a listed company with Bombay Stock Exchange and is planning to issue 3,00,000 non-convertible debentures (NCDs) @ 6% of ₹ 1,000 each, to strengthening its future projects. List the obligations the company has as required in the SEBI (Issue and Listing of Non- Convertible Securities) Regulations, 2021. (June, 25 – 5 Marks)
Q. The concept of ‘‘Green debt security ’ has been introduced in SEBI regulations; narrate any five purposes for which money raised through green debt security can be utilized. (June, 24 – 5 Marks)
Q. Comment on the following:
Can a Debenture Trustee act for issue of debentures of an associate?
Is appointment of Debenture Trustee compulsory?
Can a debenture issue be transferred? If so, when can a debenture trustee relinquish his assignments?
Is there any registration fee to be paid by the Debenture Trustee?
(Dec 23 – 4 Marks)
Q. Trust Deed under SEBI (Issue & Listing of Non-Convertible Securities) Regulations, 2021. (Dec, 24 - 3 marks)
Q. Write Short Note on the following :
Filing of information documents while Issuance and Listing of Non-convertible Securities
issued on a Private Placement Basis (June, 25 – 3 Marks)
Q. Nikunj, an IT professional from reputed engineering college, was appointed as an Independent director of a listed company. Due to some health issues, he resigned from the company eight months back. Now, the company desires to appoint him as an executive director on the Board. Examine the validity of the proposed appointment. (Dec, 22 – 4 Marks)
Q. A listed company has appointed Mihir as a director on the Board. The general meeting of the company has already been held prior to his appointment. What approval is required to regularise the appointment ? What will be your answer, if the earlier appointment of Mihir as director on the Board was rejected by the shareholders ? (Dec, 22 – 4 Marks)
Q. Amar, one of the Independent directors of Ignite Colour Ltd., a listed company, intends to hold a meeting of Independent directors without inviting the Managing Director of the company. Is the action of the Independent director valid? Give reasons. (June, 22 – 4 Marks)
Q. Saatvik is a Managing Director in a listed company as well as an Independent director in other three listed companies. One of the leading listed e-Commerce company offered him independent directorship on its Board. Whether he can accept the directorship with specific reference to SEBI regulation. Explain with reasons. (June, 2022 – 5 Marks)
Q. Earth Limited is a leading manufacturer of electrical two-wheeler vehicles. In terms of market capitalisation, it is among top 1,000 listed companies. You have been recently appointed as its Company Secretary. Immediately on joining, one of your assistants wanted to know from you what are the regulatory compliances Company has to comply with under the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Explain the requirements. (June, 25 – 5 Marks)
Q. Neo Engineering Ltd. is in the list of top 1000 listed entity on the basis of market capitalization. Based on the changes made in SEBI LODR, what would be the composition of the Board as on 1st April, 2019 and 1st April, 2020 ? Explain. (Dec, 19 – 4 Marks)
Q. Neeraj, an experienced technocrat, worked as an Executive director of an unlisted company. One of the leading listed companies (top 10), offered him Chief Executive Officer’s post, at a higher pay scale. Neeraj knows that there is numerous SEBI compliance applicable for a listed company. Being a company secretary in practice, advise Neeraj about SEBI regulations on following :
Requirement of appointment of women director.
Meeting & Quorum of the Board Meeting.
Composition of an Audit Committee. (June, 24 - 1+2+2=5 marks)
Q. Dr. Grace, aged 78 years, was appointed as non-executive director of PQR Ltd (listed company) by passing an ordinary resolution. Examine the validity of appointment of Dr. Grace as a director of PQR Ltd. (Dec, 22 – 3 Marks)
Q. With reference to the SEBI Regulations, explain with reasons, the eligibility for appointment of an Independent director in a listed company.
Arav has given his office premises on lease to the company.
Ehsaan is a component supplier.
Manav is 20 years old.
Elika holds a 1% of the total voting power. (June, 2022 – 4 Marks)
Q. E-voting by shareholders in respect of all shareholders resolution is at a negligible level. SEBI has made certain changes in its regulation to make it more effective. Explain the initiatives taken by the SEBI. (June, 2022 – 4 Marks)
Q. Pritam Ltd. is in the list of top 100 listed companies; of which financial year closes on 31st March, 2022. The company had its Annual General Meeting on September 10, 2022 and provided e-voting facility to its shareholders.
Whether the action of the Pritam Ltd. is tenable ?
What is the requirement of proceedings of Annual General Meeting ?
Can Pritam Ltd. provide the remote e-voting facility to its shareholders as per the Act ?
What is the time period for submitting the required details to stock exchange? (Dec, 22 – 5 Marks)
Q. Home Technology Ltd. has recently listed on the leading stock exchanges. Advise the company on the compliance of corporate governance regulation for holding of maximum number of directorship by a director of the company. If the company is having paid up capital and reserve & surplus ₹ 8 crore & ₹ 12 crore respectively, are there any exceptions in the compliances with the corporate governance under the SEBI Regulations ? (Dec, 21 - 4 Marks)
Q. X is a Managing Director of ABC Ltd. and awarded title of best CEO of the country. Four leading listed companies invited him to join their Board as an Independent Director for sharing his knowledge. Can X join as an Independent Director on the offer made by four listed entities ? Give your answer with reason. After superannuation, X is planning to join as an Independent Director of ten listed companies. Do you agree with the planning of X ? (Dec, 21 – 5 Marks)
Q. Suzan Limited is in top 1000 listed companies. Referring to provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of directors seeks your advice as a company secretary regarding the following two matters :
Quorum in Board meeting
Maximum number of directorship in a listed entity by a director. (June, 21 – 4 Marks)
Q. You are the Company Secretary of Fortune India Limited, a listed company on the leading Stock Exchange. Your Managing Directors desires a list of yearly compliances under the listing regulations. Briefly list-out the yearly compliances. (June, 21 – 5 Marks)
Q. SEBI (LODR) Regulations, 2015 as amended imposes an obligation on every listed company to constitute Nomination & Remuneration Committee and Risk Management Committee. Briefly explain the constitution and role of these committees. (June, 21 – 4 Marks)
Q. Elegance Limited, is the Subsidiary of Prosperity Limited as on 31st March, 2021. The Holding company is listed with National Stock Exchange. Elaborate the Corporate Governance requirements relating to the subsidiary company to be complied by Prosperity Limited under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. (June, 25 – 5 Marks)
Q. What are the recognitions given to Company Secretary in Practice for providing various certifications/reports as required under SEBI (LODR) Regulations ? Explain briefly. (June, 21 – 4 Marks)
Q. Diamond Company Ltd. entered into listing agreement on 21st May, 2018 as per SEBI (LODR) Regulations, 2015 with Bombay Stock Exchange (BSE). The Company is planning to conduct a Board Meeting of its Directors on 28th June, 2018 for consideration of its Annual Financial Results. Whether the company needs to give prior intimation to the BSE ?
Explain the matters for which prior intimation of the Board Meeting shall be given to the BSE under SEBI Regulations. (Dec, 20 – 4 Marks)
Q. GK Ltd. is a listed company having paid up equity share of `8 crore, preference share capital of `5 crore and net worth of `15 crore as on 31st March, 2019. The management intends to implement a “Code of Conduct” for Board of directors and senior management under SEBI (LODR) Regulations, 2015. You are required to prepare a draft agenda for the Board meeting on the applicability of above provisions. Also advise on the situation, if equity share capital increase to `15 crore, preference share capital to ` 8 crore and net worth to `35 crore. (Dec, 20 – 5 Marks)
Q. A listed company can apply to stock exchange for re-classification of the Promoter's holdings as public shareholders under SEBI regulations. Whether following promoters can apply for re-classification with reference to SEBI regulations ?
Promoter is declared as willful defaulter as per RBI guidelines.
Promoter is holding 12% of total voting rights in the listed entity.
Promoter is acting as CEO of the listed entity.
The promoter company has outstanding listing fees only for one year. (June, 19 -4 Marks)
Q. Following persons desires to change their status from promoters to public i.e. re-classification of promoters shareholders to public shareholders. With reference to SEBI regulations, advise whether they are eligible for reclassification ?
Raman is acting as a Company Secretary
Naina defaulted repayment of loans and declared as wilful defaulter as per RBI guidelines
Mayank is holding 15% of total voting rights.
The trading of equity shares of the company suspended by the stock exchange.
Minal acting as a Chief Financial Officer. (June, 24 – 5 Marks)
Q. An IPO is made by Rakesh Steel Ltd., which is a listed company on the stock exchange. The Managing Director of the company directs the Company Secretary to prepare details of half yearly compliance requirements as per the listing agreement. Explain the same. (Dec, 19 – 4 Marks)
Q. For ensuring independence in the spirit of Independent Directors and their active participation in functioning of the company, SEBI has accepted many recommendations of Committee setup under the Chairmanship of Shri Uday Kotak and made amendments in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Explain any four amended provisions related to Independent Directors. (Dec, 18 – 4 Marks)
Q. You are the Company Secretary of Sunglow Ltd., which being listed on the Stock Exchange after an IPO is made by the company. The Managing Director desires to know about quarterly compliance requirements under listing agreement. Prepare a list of quarterly compliances as per the listing regulations. (Dec, 18 – 4 Marks)
Q. ‘‘Audit committee may grant omnibus approval for related party transactions.’’ Elucidate the statement. (June, 21 – 5 Marks)
Q. MCS Ltd. is a listed company with Bombay Stock Exchange Ltd. The Company enters into related party transactions frequently with MAP Ltd. in which one of director of MCS Ltd. holds 3% paid up capital of MAP Ltd. MCS Ltd. feels that getting the approval of Audit Committee for each transaction is time-consuming and delaying the operational plan. You, being a Company Secretary of MCS Ltd., advise the management with reference to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for approval of the related party transactions from the Audit Committee for next one year. Will your answer be different if MAP Ltd. is wholly owned subsidiary of MCS Ltd. ? (Dec, 18 – 5 Marks)
Q. X, a shareholder of a listed company holding 1,000 equity shares of ₹ 100 each on 1st January, 2019 in physical form, wants to transfer to another shareholder Y on 1st May, 2019. X is also holding Commercial Paper & Certificate of Deposits of `50,000 & `20,000 respectively. As a Company Secretary of the company, write a note on :
Whether X can transfer his shares to Y in physical form ?
Are Commercial Paper & Certificate of Deposits available for dematerialisation at Depository ? (Dec, 21 - 3+2=5 marks)
Q. Joshi Ltd. is a listed entity entered into a transaction with related party, namely Hosh Ltd., for an amount of `59 crore and simultaneously made a payment of `10 crore for brand use. The turnover of Joshi Ltd. is `480 crore on standalone basis and after considering consolidation of subsidiary & associate is `610 crore. You, being a company secretary of the company, advise on the following:
Whether the transaction is a related party transaction or not ?
Whether the payment made for brand uses is a related party transaction or not ?
When transactions with related party are material in above both the cases ?
What is omnibus approval of audit committee for all related party transactions?
Q. Discuss the compliance requirement under the SEBI (LODR) Regulations, 2015 pertaining to Risk Management Committee. Examine the validity of the agenda, ‘RNG Ltd. intends to pass ordinary resolution in relation to appointment of independent director’ with respect to Regulation 25 of SEBI (LODR) Regulations, 2015. Whether the appointment of X, as an alternate director is valid at the place of independent director Y? (Dec 23 – 8 Marks)
Q. RJS Ltd. is in the list of top 500 listed entities. P is a non-executive chairman of the company. Q, R & T are the promoters of the company. P is related to the one of the promoter T. A is the only woman director (executive director) in the Board. Further, the company is planning to appoint C (aged 70 years) as a non- executive director. Answer the following with reference to the SEBI (LODR) Regulations, 2015:
Whether the company still requires to appoint another woman director?
What is your view for the requirement of independent directors of RJS Ltd.?
Who shall approve the related party transactions in the Audit Committee meeting of a listed company?
Whether the appointment of C is valid?
(June 23 – 4 Marks)
Q. XYZ Limited is having three subsidiaries X Ltd., Y Ltd., and Z Ltd. The consolidated income of XYZ Limited is ₹ 300 crore and net worth is ₹ 600 crore. The income and net worth of X Ltd., Y Ltd., and Z Ltd. are as follows:
| Company | Income (₹) | Net worth (₹) |
|---|---|---|
| X Ltd. | 10 crore | 65 crore |
| Y Ltd. | 45 crore | 14 crore |
| Z Ltd. | 10 crore | 18 crore |
Examine if there is any material subsidiary of XYZ Limited. (June 23 – 4 Marks)
Q. What is the information to be reviewed by the Audit Committee for approval and the information to be provided to shareholders for their consideration of Related Party Transactions (RPTs) in case of a listed entity as per the amended SEBI (LODR) Regulations, 2015? (June 23 – 8 Marks)
Q. Prikshit is appointed as an independent director on the Board of PQR Ltd. The Company has issued ESOPs to Prikshit deeming him to be its employee. Answer the following:
Whether Prikshit is entitled to receive the ESOPs (give reason) ?
What would be your answer, if Prikshit is a non-executive director belongs to the promoters group and holds 12% outstanding equity shares of the company?
(June 23 – 4 Marks)
Q. ECOM Ltd. is one of the leaders in e-commerce business. Its Board has a strength of 12 directors excluding three Nominee directors (not liable to retire by rotation) and four independent directors.
The company had completed 1st round of fund raising two years back. One of the conditions of shareholders agreement was to list the securities in near future. To tap the opportunity of growing stock market, it is planning to list on the stock exchange platform, so that, its existing Anchor investors are able to sell their holding. The Company Secretary has advised for changes in the composition of directors as per SEBI regulations.
Nirvan (non-executive director) having in depth experience, will be attaining the age of 65 years after listing. After listing, the managing director (serving as an Independent director in two listed entity and one unlisted entity) expected to receive offers for appointment of Independent director in three more listed entity.
The promoters are actively engaged in various philanthropic activities. They are promoters of “Save Tree Foundation”, a section 8 company, working for the livelihood generation amongst underprivileged community. It is learnt that now a Not for Profit Organization can also raise funds through open market.
After analysing these facts, answer the following :
How many directors should be liable to retire by rotation at the annual general meeting ?
What is an upper age limit for appointment or continue as non-executive director without any approval from shareholders ?
What is the maximum limit of an independent directorship for a managing director of listed company ?
What is the type of instrument under which a Not for Profit Organization can raise fund
through market ?
If a director of a listed entity has vacated his office for medical reasons, please advice how his office can be filled. (Dec, 24 – 2 Marks each)
Q. ABC Limited, is a newly formed manufacturing company by a prominent industrial house. Within 3 years of its incorporation, it has issued its first bonus shares. Considering its overall business performance, shares prices of ABC Limited is transacted around 18 times of its PE in Bombay Stock Exchange. But, due to some difference with its management, the Company Secretary has vacated the post of KMP.
Looking at your past performance, ABC Limited has appointed you as their new Company Secretary. One of your junior Company Secretary wanted to know, which outcomes of the board meeting should be disclosed to the Bombay Stock Exchange within 30 minutes of the closure of these meetings? Please explain. (Dec, 24 – 5 Marks)
Q. Since 29th August, 2023, VXL Limited has listed its three specified securities, with National Stock Exchange. As part of compliances, specify the compliance requirements it has to do as one-time compliance relating to these specified securities. (June, 25 – 5 Marks)
Q. What are the objectives that C. Achutan Committee had recommended with respect to SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 2011. (June, 25 – 5 Marks)
Q. Zubin has been declared by a private bank PB Ltd, as a willful defaulter under SEBI (Substantial Acquisition of shares and Takeovers) Regulations, 2011. But, he is interested to acquire shares of XYZ Ltd. Explain the meaning of the willful defaulter. He is declared as willful defaulter by the private bank, therefore discuss about any option available with Zubin to acquire shares of XYZ Ltd ? (Dec, 24 – 5 Marks)
Q. Write short notes on the following :
Frequently Traded Shares (Dec, 24 – 3 Marks)
Q. What is competing offer ? What is the timeliness in case of competing offer ? (Dec, 22 – 4 Marks)
Q. ‘‘An open offer for acquiring shares once made shall not be withdrawn.’’ Comment on the statement. (June, 21 – 5 Marks)
Q. Write short note on the following:
Enterprise Value (June, 24 – 3 Marks)
Q. What do you mean by Enterprise value under SEBI Takeover code ? From the given information, calculate the Enterprise value of KRS Ltd. :
Q. Romeo International Limited, an Indian public limited company, is listed on BSE. On Friday i.e. 14th December, 2018 one of the shareholders of the Company, Ganesh, who was already holding 30% stake in the company, made a public announcement for an open offer for the acquisition of 13 crore equity shares (Face value `10 each), constituting 26% of the equity share capital of the Romeo International Limited. The offer price per share according to Takeover Regulations is arrived at `500 per share.
Explain the following with reference to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011:
What is the time limit for depositing amount in escrow account and explain with the relevant provisions, what amount should be deposited in escrow account in this case?
(b )Explain the forms of maintaining the escrow account. (Dec, 20 – 5 Marks)
Q. “Increase in voting rights in a target company by any shareholder pursuant to buyback is exempted from the obligation to make an open offer subject to certain conditions”. In the light of the statement, you are required to enumerate these conditions. (Dec, 20 – 4 Marks)
Q. Nova Industries Ltd. (‘Nova’) is an Indian company engaged in the business of manufacturing of Automotive Equipments. The equity shares of the ‘Nova’ are listed on NSE. Star Investment Ventures Ltd. (‘Star’) owns 16% stake in the Nova. Moon Investment Company Pvt. Ltd. (‘Moon’) owns 14% stake in the Nova. Star and Moon have also been classified as promoters of the Nova in its shareholding pattern for over 5 years. As decided by the management of Star and Moon, it is proposed that Moon will be absorbed by Star through a scheme of arrangement, pursuant to which Star’s shareholding in the Nova will increase from 16% to 30% as the shares held by Moon will be transferred to Star and vested in Star and their shareholders will become shareholders of Star. The entire consideration for the amalgamation would be discharged by Star by the issue of its shares. The scheme is likely to be completed and approved by the National Company Law Tribunal sometime during the financial year 2019-2020.
Explain the provisions and conditions given under regulation 10(1)(d)(iii) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for availing the exemption.
Would the transfer and vesting of shares of the Nova in Star, be exempt from open offer obligations ? (Dec, 20 – 5 Marks)
Q. Miraj Ltd. (‘‘Target Company ’) is a listed company. The existing holding of promoters’ group in Miraj Ltd. is 45%. One of the promoters’ groups wants to transfer 2% shares to another promoters’ group.
Miraj Ltd sought your expert opinion on the requirement of open offer and applicability of exemption under SEBI (SAST), Regulations, 2011 for making compulsory open offer. (June, 24 – 5 Marks)
Q. Explain the Modes of Payment to the shareholders of the Target Company on acquisition of shares by the acquirer under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. (June, 19 – 4 Marks)
Q. An acquirer, holding 25% or more but less than maximum permissible non- public shareholding of the Target Company can acquire such additional shares as would entitle him to exercise more than 5% of the voting rights in any financial year. Explain the statement indicating the creeping acquision limit for making an open offer by an acquirer. (June, 19 – 4 Marks)
Q. An unlisted public company ("Acquirer") doing business of exporting steel and it is a part of the Promoter Group of Maurya Hotels (India) Ltd. (MHIL), a company listed on stock exchange. In view of improving its efficiency, MHIL is planning to restructure its group. The Acquirer has agreed to enter into a scheme of arrangement where the shares held by the promoter group companies (eight companies) will be transferred to it. Post-merger, the shareholding of the Acquirer in the Company will increase from 2% to 24%. However, the overall promoter shareholding will remain unchanged. You, being practicing company secretary, appointed as consultant by the Acquirer, answer the following :
Will the transfer of shares trigger an obligation to make an open offer under the SEBI (SAST) Regulations on the Acquirer ?
What are the disclosure requirements under the SAST Regulations, if any, that the parties to the scheme will have to comply with ? (June, 19 – 5 Marks)
Q. Nalin Estates Ltd. (“Target Company”) is a listed company. The promoter group shareholding in the target company is 47%. It proposes to transfer of 2% shares held by one promoter group to another promoter group.
The target company sought your advise as a practicing Company Secretary on the applicability of exemption provided under SEBI (SAST) Regulations for making compulsory open offer. (Dec, 19 – 5 Marks)
Q. Visualsight Ltd. is a listed company. The promoters hold 61.50% paid up equity share capital as on 31st March, 2018. On November 2, 2018, some of the promoters who hold convertible warrants in the company converted 1500000 warrants into shares, as result of which the holding of promoters increased by 4.10%. Vihaan (“Transferor”), one of the promoters holds 18.50% of equity share capital in the company proposed to gift 1.20% equity shares of the company to immediate relative by way of Transferor. Taking into account SEBI (SAST) regulations, answer the following questions in detail :
Whether the proposed transfer trigger an obligation upon the Transferor for open offer ?
Will the transaction covered under creeping acquisition ?
Would the promoters be permitted to avail any exemption under the regulation? (Dec, 19 – 8 Marks) (4+2+2=8 marks)
Q. What do you mean by Disinvestment? What is the time limit within which the public announcement is to be made in case of disinvestment? What are the automatic exemptions under SEBI Takeover Regulations, 2011 for disinvestment? (June 23 – 5 Marks)
Q. M is contemplating acquisition of PQR Limited, a listed entity. He presently holds 23% and his sister, who is having common objective, holds 3%. Their combined holding is 26%. M, in view of creeping acquisition limits, desires to acquire further 3% on the assumption that 5% is the ceiling for such acquisition in every financial year. Will M be required to make open offer? (June 23 – 4 Marks)
Q. Write Short Note on the following :
Exemption by SEBI under Regulation 11 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 (June, 25 – 3 Marks)
Q. You are the Company Secretary of Green Grains Limited, a listed entity. In the last board meeting, one of the Board members wanted to understand the principles of fair disclosure under the SEBI (Prohibition of Insider Trading) Regulation, 2015. Elaborate the requirements under the Codes of Fair Disclosure. (June, 25 – 5 Marks)
Q. The term internal control is generally linked to controls mechanism for financial and non-financial processes of an entity. Is there any internal control process to prevent insider trading under SEBI regulations ? You, being a Company Secretary of the company, suggest your CEO about internal controls to ensure the compliance under the said regulation ? (Dec, 21 – 4 Marks)
Q. ‘‘Trading plan is an exception to the general rule that an insider should not trade when in possession of unpublished price sensitive information’’. In the light of this statement, explain the concept of trading plan and its essential elements. (June, 21 - 4 marks)
Q. Referring to the SEBI Insider Trading Regulations, answer the following :
What is ‘unpublished price sensitive information’ ?
State with reasons whether the following information is price sensitive :
RBI has increased its Statutory Liquidity Ratio (SLR) by 15 basis points.
The company is increasing its authorized share capital . (June, 21 - 4 marks)
Q. Write short notes on the following :
Trading Mechanism . (June, 21 - 3 marks)
Q. The price of equity share of a listed company viz. NextDial Ltd. (NDL) increased from `10 to high of `50 i.e. a rise of 500% during the period 1st April, 2018 to 30th Sept., 2018. NDL had entered into a Share Purchase Agreement (SPA) with the proposed acquirer(s) to acquire 40% of the subscribed equity share capital as of 31st Aug., 2018 which would result in change of management. This initial discussion on the deal was made on 1st April, 2018 but SPA was signed on 25th April, 2018. During 1st April, 2018 to 30th Sept., 2018, the promoter and his wife dealt in the script of NextDial Ltd. Referring to the provisions of SEBI (PIT) Regulations, answer the following :
Define Unpublished Price Sensitive Information.
Whether there was any Unpublished Price Sensitive Information (UPSI) ?
What will be the date of UPSI ?
What are the factors to be taken into account by the adjudicating officer while imposing penalty for the act ? (June, 19 – 8 Marks)
Q. Who can be a Compliance Officer under SEBI (PIT) Regulation, 2015 ? Will an Engineering graduate from a top engineering college with 5 years of experience working as Chief Technical Officer (CTO) be a Compliance Officer ? Discuss. (Dec, 19 – 4 Marks)
Q. What is Trading Plan under SEBI (Prohibition of Insider Trading) Regulations, 2015 ? State the requirements to be complied with in this regard. (Dec, 18 – 4 Marks)
Q. You are working as the Company Secretary of a listed company viz. Mindspare Ltd. The company is in advance stage of negotiation with a buyer, who will drastically improve the profitability and financial position of the company. You have got some information that one of the employes of the company, who is involved in the negotiation may indulge in trading of shares of the company. Being a compliance officer, you are required to formulate a code of conduct to regulate, monitor and report trading by employees and other connected persons towards achieving compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015. (Dec, 18 – 7 Marks)
Q. Morgan Care Limited (‘‘MCL’’) is a public limited company, which has its equity shares listed on both BSE Limited and National Stock Exchange of India Limited. Carlton Price Private Limited (‘‘CPPL’’) is a part of the promoter group of MCL since it is closely held by certain promoters of MCL. However, currently CPPL neither holds any equity shares in MCL nor has any role in the management of MCL. The ‘Promoter and Promoter Group’ of MCL collectively hold 65.44% of the total paidup capital of CPPL, as on date. Being a public listed company, MCL has issued a ‘Code of practice and procedures for fair disclosure of unpublished price sensitive information (‘‘UPSI’’) and code of' conduct to regulate, monitor and report trading by insiders of MCL in accordance with the SEBI (Prohibition of Insider Trading Regulations), 2015. CPPL now intends to acquire 50,000 equity shares, constituting 0.06% of the paid-up capital of MCL (‘‘Proposed Acquisition’’), which is beyond the thresholds stipulated by the board of directors of MCL for trading by designated persons. In view of the above facts, answer the following questions:
What category of persons are required to obtain a pre-clearance from the compliance officer of a listed entity prior to trading?
Will CPPL be required to obtain a pre-clearance from the compliance officer of MCL for the Proposed Acquisition?
Does the compliance officer have discretionary powers under the SEBI (PIT Regulations) to reject a pre-clearance request on any reason it deems fit?
Is the compliance officer required to consider certain factors while approving or rejecting an application seeking pre-clearance for a proposed transaction?
Is there any provision in the SEBI (PIT Regulations) that provides for the examination of acts of a compliance officer?
(Dec 23 – 5 Marks)
Q. In light of SEBI Insider Trading Regulations, explain with reasons whether the following information is deemed as price sensitive:
Managing Director of ABC Ltd. met with an accident and was hospitalized.
EF Ltd. is under negotiation to enter into a foreign collaboration with a Korean company for technical knowhow.
RBI has increased its repo rate by 25 basis points.
XY Ltd. is proposing for issue of bonus shares for its shareholders.
The Chairman of RN Ltd. has submitted his resignation to the Board after reading a news article proposing to sell a particular brand to another company by the promoters of the company.
(June 23 – 5 Marks)
Q. David, General Manager (finance) of Suren Enterprises Ltd., was found to be indulging in insider trading activities. As a result, the company terminated his services. The SEBI also took cognizance of the matter and initiated proceedings against him under Insider Trading Regulations. David pleaded that since his service had already been terminated, SEBI could not initiate any proceedings against him. Suggest, what type of action can be taken by SEBI against him? (June 23 – 5 Marks)
Q. Write short note on the following:
Fraud under SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. (June, 24 – 3 Marks)
Q. Elaborate the prohibitions of certain dealings in securities under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulation, 2003. (June, 25 – 5 Marks)
Q. Pinki Ltd. being a listed company has not complied the requirements of listing agreement with the stock exchange. The stock exchange decided for compulsory delisting of the securities from its trading platform. Answer the following :
Whether once listed, stock exchange can go for compulsory delisting of securities of Pinki Ltd. ?
What are the provisions for constitution of panel ?
What time period will be given for representation to Pinki Ltd. ? (Dec, 21 -4 Marks)
Q. SAARC Ltd., a company listed on nationwide two stock exchanges. It decided to delist its securities from both the stock exchanges. By complying all delisting regulations, the promoters have made an open offer to buy shares from public shareholders. Referring to the SEBI Delisting Regulations, advise the company with respect to the following matters :
How the payment of consideration will be made to the successful shareholders who have tendered their shares in an open offer ?
What are the rights of remaining shareholder who have not tendered their shares during open offer ? (June, 21 – 4 Marks)
Q. Karuna Ltd. made an Initial Public Offer (IPO) of equity shares in March, 2020 and was granted listing on stock exchange. Soon, thereafter, the promoters of the company started contemplating a change in the objects clause mentioned in the offer document. To give effect to the same, the company convened an extra-ordinary general meeting of shareholders in April 2020. Though the requisite resolution was passed by the company, there were, nevertheless, the dissenting shareholders too. The promoters decided to provide an exit opportunity to the dissenting shareholders. In the light of the above, answer the following :
Who are the dissenting shareholders ?
What is the eligibility of shareholders for availing the exit offer ?
Enumerate the conditions required to be complied with to give effect to this recourse which was availed by the promoters.
How the exit offer price will be determined ? (June, 21 – 7 Marks)
Q. Young Ltd. is a company incorporated under the provisions of the Companies Act, 2013. The Company is listed on National Stock Exchange since 1st January, 2017. The promoters of the Company are now exploring the possibility to voluntarily delist the Company on or before 1st October, 2019 under the SEBI (Delisting of Equity Shares) Regulations, 2009 by providing an exit opportunity to all the public shareholders. Assume that you are a legal advisor of the Company and accordingly, answer the following questions :
Is the Company eligible for voluntary delisting in terms of the Delisting Regulations ?
What are the circumstances/conditions under which equity shares of a company cannot be delisted as per the Delisting Regulations ? (Dec, 20 – 4 Marks)
Q. Mr. X, Mr. Y and Mr. Z are the promoters of KP Ltd. They submitted the documents for delisting of shares from BSE. The company received the delisting order on 31st July, 2019. The management hired a practising company secretary for the successfl completion of the delisting process. You are required to prepare a board note as to what information should be given in public announcement. (Dec, 20 – 7 Marks)
Q. The Board of directors of a listed company desires to delist its equity shares from all the recognised stock exchanges. The voting details through postal ballot are as under :
Total nos. of voters : 7,000 (Public : 5,000 & Promoters : 2,000)
Voting at shareholders meeting :
Public shareholders :
In favour : 3,300 votes
Against : 1,700 votes
All promoters shareholders have voted in favour of resolution.
By referring SEBI delisting regulation, decide upon the resolution passed by the shareholders. (June, 19 – 4 Marks)
Q. The equity share of Ashina Buildcon Ltd., was listed on National Stock Exchange Ltd. (NSE). NSE delisted its shares by complying SEBI guidelines on delisting. The order of delisting was passed on March 05, 2017. Kunj, one of the shareholder has not participated in the bidding process due to ill health, He wanted to tender shares on January 01, 2018. Analyze the problem in the light of the SEBI (Delisting of Equity Shares) Regulations, 2009. (Dec, 18 – 4 Marks)
Q. Sun Limited, is a leader in the domestic paper manufacturing industry and also a part of Nifty 50 list of National Stock Exchange. Despite the company is doing its best, the Board of Directors have in-principle decided and are in the process of approving the delisting proposal in the next Board meeting. You being the Compliance Officer, have been advised by the Board for Due-Diligence to be carried out by a Peer Review Company Secretary. Elaborate the relevant provisions relating to this process. June, 25 -
Q. With reference to the SEBI (Delisting of Equity Shares) Regulations, 2021, state the requirement for appointment of Peer Reviewer Company Secretary to carry out due diligence. (Dec, 22 – 4 Marks)
Q. RRR Ltd. is a listed company. It has not satisfied the requirements of listing agreement with the Recognized Stock Exchange. The Stock Exchange decided for compulsory delisting of the securities from the trading platform. In the light of SEBI (Delisting of Equity Shares) Regulations, 2021, answer the following:
Q. The equity shares of ABC Limited have been delisted from the stock exchange. When can an application be made for listing of equity shares of ABC Limited? (June 23 – 4 Marks)
Q. ABC Ltd. is an auto component manufacturing company, incorporated under the provisions of the Companies Act, 2013. This company is listed on Bombay Stock Exchange. The paid up capital of the company is ` 400 crore as per the latest audited balance sheet. The company fails to comply with the various requirements set out in the listing agreement within the prescribed time period. The stock exchange orders for the compulsory delisting of the equity shares of ABC Ltd. Being the Company Secretary of ABC Ltd, you are required to advise regarding :
Q. Power Trends Limited, a listed company, wants to go in for voluntary delisting. The company has decided, to come out with an Exit Offer for the public shareholders. As your organisation is a SEBI Registered Merchant Banker, hence the company has appointed your organisation as the ‘Manager to the Exit Offer’. Describe the obligations, you will have before making the detailed public announcement. (June, 25 – 5 Marks)
Q. An extract of Balance Sheet of Airrath Aviation., Ltd., comprises of :
Q. Answer the followings with reasons, with reference to SEBI Buyback Regulations, whether these buy-back are as per the provisions of the regulations ?
The company can directly or indirectly purchase its own shares through any subsidiary including its own subsidiaries.
The company has made buy-back of shares out of the proceeds of an earlier issue of the same kind of shares.
The Company Secretary of the company advised not to allow buy-back of shares unless the consequent reduction of share capital is affected.
The company has prohibited from Buy-back whose default is remedied and a period of two years has lapsed after such default ceased to subsist.
The Board of directors has denied the offer of buy-back of shares for 16 percent of the paid up capital and free reserves to be made from the open market. (Dec, 21 - 1 mark each = 5 marks)
Q. PQR Limited, a listed company, is intending to make buy-back of its equity shares. Referring to SEBI Buy-back Regulations, explain the following :
The manner of deposit of amount in Escrow account.
How can an unregistered shareholder tender his shares for buy-back ?
What is time limit for completing buy-back process ? (June, 21 – 4 Marks)
Q. The share price of a listed industrial paint manufacturing company is continuously falling for the last one month, due to rising price of the crude oil, which is the prime raw material for the company’s products. The management feels that the product situation will improve in near future. The CEO of the company advised to buy-back its shares, as he considers this as a right time to do so. Advice the management about the approval requirement from Board/shareholders and opening of escrow account for funding of buy-back offer. (June, 24 – 5 Marks)
Q. The following is an extract of Balance Sheet of Alpha Ltd.:
Equity Shares Capital — 50,000 Equity Share of `10 each. 10%
Debenture Capital — 20,000 Debenture of `10 each.
On 21st April, 2018, the Board of directors decided to buy-back 5,000 equity shares for which they would call Extra-ordinary General Meeting. In the year 2016, the company has defaulted in payment of interest on secured loan to Bank amounted to `25 crore, which was remedied in the year 2017. Comment on the above situation. (Dec, 20 – 5 Marks)
Q. Can a Company buy-back its own shares or any specified securities through negotiated deals or through any private arrangements ? Comment with methods allowed for buy-back. (June, 19 – 5 Marks)
Q. The financial data of a listed company as on 31st March, 2018 are as follows :
| Authorized equity share capital | Rs. 10 crore (1 crore shares of `10 each) |
|---|---|
| Paid-up equity share capital | Rs. 5 crore |
| General Reserve | Rs. 3 crore |
| Debenture Redemption Reserve | Rs. 2 crore |
The Board of directors of your company passed resolution by circulation for buy-back of shares to the extent of 9% of the company's paid-up share capital and free reserves. You are required to examine the validity of the proposal with reference to the provisions of the SEBI Regulations. (June, 19 – 4 Marks)
Q. TechNoGrow Ltd. approved buy back proposal of 200000 Equity share capital in its Board meeting on 25th April, 2019. The record date was fixed on 25th June, 2019. The closing market price on NSE as on 25th April, 2019 and 25th June, 2019 was `2640.40 and `2514.05 respectively. Determine the number of equity shares which is eligible to be tendered by Small Shareholder Category (rounded off to lower whole number). (Dec, 19 – 5 Marks)
Q. RN Ltd., has equity share capital of 20,00,000 of face value of `10 each, listed in Bombay Stock Exchange. The company has proposed for buy-back of its shares up to 25%. As a Company Secretary explain the conditions for buy-back of shares. (Dec, 19 - 7 marks)
Q. Write short notes on the following
Distinguish between Regular and Direct plan of a mutual fund scheme (June, 24 – 3 Marks)
Q. The Expense Ratio of a mutual fund scheme is the cost of running and managing a mutual fund, which is charged to the scheme. What expenses are covered in the Expense Ratio and how does it affect the NAV? (June, 25 – 5 Marks)
Q. Grow India has recently launched a Mutual Fund Scheme with the name ‘GI Equity Multi Cap Scheme’ with following details:
Q. “While evaluating the performance of a mutual fund, one must not be led by the mutual fund return in isolation.” In this context, elucidate how performance of mutual fund is evaluated ? (Dec, 21 – 4 Marks)
Q. (i) Rakesh has invested `20,000 in PQR Mutual Fund with entry load 1%. Find out the Net Asset Value if the number of units purchased was 100.
Q. R is holding 2000 units of a equity-oriented scheme of a mutual fund and 1000 units of a debt scheme of a mutual fund. On 7th June, 2020 he is interested to redeem these units. Prevailing net asset value (NAV) of these units are as under :
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He makes an application for redemption of above units on 7th June, 2020 at 2:30 pm. Based on given information answer the following :
What do you mean by cut-off time ? What are the cut-off time for equity- oriented & Debt funds (except liquid funds) ?
What will be the applicable NAV in his case ?
What will be applicable NAV if application for redemption is made at 3:15 pm ? (June, 21 – 5 Marks) (3+1+1 marks)
Q. The information relating to one Equity Oriented Mutual Fund is given below :
| As on 2nd January, 2019 (in thousands) | As on 3rd January, 2019 (in thousands) | ||
|---|---|---|---|
|
|
19,300 | 19,800 |
|
|
200 | 200 |
|
|
150 | 150 |
|
|
50 | 50 |
|
|
100 | 100 |
|
5,00,000 | 5,00,000 | |
|
NAV of the fund on 2nd January, 2019 and 3rd January, 2019.
Ramesh invested `1,95,000 in this Fund on 2nd January, 2019 at 02:00 PM, through Internet Banking Payment System. Calculate the number of mutual fund units allotted to him. Assume that there is no transaction cost. (Dec, 20 – 5 Marks)
Q. A Mutual Fund having 300 units has shown Net Asset Value (NAV) of `8.75 and `9.45 at the beginning and at the end of the year respectively. The Mutual Fund has given two options :
Pay ` 0.75 per unit as dividend and `0.60 per unit as capital appreciation; or
These distributions are to be reinvested at an average NAV of `8.65 per unit
What difference it would make in terms of return available and which option is preferable ? (June, 19 – 5 Marks)
Q. Life-Changing Assets Management Ltd., a mutual funds company desires to engage a bollywood celebrity to popularize its schemes. Explain the SEBI provisions with regard to celebrity endorsements of Mutual Funds at industry level. (June, 19 – 4 Marks)
Q. Write Short Note on the following :
Advertisement code for Mutual Funds (June, 25 – 3 Marks)
Q. A large mutual fund asset management company holding a portfolio of ` 2,000 crore. It has launched a new Multi Cap Fund and wishes to engage bollywood celebrity to popularize this scheme. Is it permissible under SEBI regulations ? Will it make any difference, if the company intends to disseminate the awareness in general about the mutual fund industry ? (June, 24 – 4 Marks)
Q. A Mutual fund has shown Net Asset Value (NAV) of ₹ 11.60 at the commencement of the year. At the end of the year NAV increases to `12.50. Meanwhile, the Fund distributes `0.75 as dividend and `0.85 as capital gains.
Calculate the fund’s return during the year.
Had these distributions been re-invested at an average NAV of `12.20, what is the return for 400 units ? (Dec.2019 – 5 Marks)
Q. Explain the various risks involved in investing in mutual funds. (Dec.2019 – 4 Marks)
Q. A mutual fund has a NAV of `11.50 at the beginning of the year. At the end of the year NAV increases to `12.10. Meanwhile the fund distributes `0.80 as dividend and `0.70 as capital gains.
What is the fund’s return during the year ?
Had these distributions been re-invested at an average NAV of `11.80, what is the return for 200 units ? (Dec, 18 – 5 Marks)
Q. “Expense Ratio for a mutual fund should be as low as possible.” Explain how increase or decrease in Total Expense Ratio (TER) shall be disclosed by Asset Management Company under SEBI (Mutual Funds) Regulations, 1996? ( Dec, 18 – 5 Marks)
Q. Recently the SEBI has mandated the formation of Audit Committee for Asset Management Company (AMCs) of mutual funds. Briefly explain the Role and Composition of Audit Committee. (Dec, 22 – 5 Marks)
Q. SEBI has come out with modified provisions for investment and trading in securities by employees of Asset Management Companies (AMCs) and trustees of mutual funds. Explain briefly the term “access person” under these provisions. (June 23 – 5 Marks)
Q. Write short notes on the following :
Asset Management Company (Dec, 24 – 3 Marks)
Q. Write short note on the following:
Code of Conduct of Mutual Fund (Dec, 24 – 3 Marks)
Q. Zebra invested in a mutual fund scheme at a time when its net asset value (NAV) was ₹ 12.65 per unit. 60 days later, the NAV of the scheme was ₹ 12.25 per unit. In the meantime, the scheme distributed ₹ 0.60 per unit as dividend.
Calculate the holding period return for Zebra.
Calculate the annualized return for Zebra. (June, 25 - 2+3 = 5 marks)
Q. What do you understand by the word “Ponzi Scheme” ? Who regulate the Collective Investment Scheme ? List any four key aspects for launching a Collective Investment Scheme. (Dec, 21 – 4 Marks)
Q. “Co-ordination of Trustee and Collective Investment Management Company is absolutely necessary for success of a Collective Investment Scheme.” Explain in this context, the rights available to the trustee. (Dec, 20 – 4 Marks)
Q. The GreenWood Ltd. had launched a scheme named as Malamal scheme. The scheme entailed a one-time payment of ₹ 10,000 in lieu of a unit of 10 Teakwood trees with a holding period of 20 years and on maturity, the contributor/investor have an option to get the Teak trees or the realized sale proceeds thereof. The scheme was launched by the company for two calendar years. Within such short span of time, the scheme mobilized ₹ 2 crore from 2,000 contributors/investors. The scheme was being carried on without obtaining registration from SEBI. Referring to the SEBI Regulations, answer the following:
State the provisions under which the registration was required.
What are the powers of SEBI in this regard?
What should be the minimum duration of the scheme? (June, 22 – 7 Marks)
Q. Leisure Hill Cottage Ltd., collected ₹ 500 crore from general public under its novel scheme, “Roaming Holiday”. The scheme provides monthly installments and upon completion of installment tenure, the investor can opt for holiday with all facilities or a return of corpus with interest. Will this scheme come under the SEBI regulations? Explain. (June, 2022 – 4 Marks)
Q. ABC Ltd. is a SEBI registered Collective Investment Management company. It has launched a Collective Investment scheme viz. ‘‘Har Ghar Sapna’’ and collected money for acquiring land and construction of houses. Due to sudden downfall of real estate market, only 15 investors with a total subscription of `15 crore applied in the scheme. Whether the company can run the scheme ? Give answer with reference to the amended SEBI Regulations. (Dec, 22 – 4 Marks)
Q. Comment on the following in light of SEBI (Collective Investment Schemes) Regulations, 1999:
Can a collective investment scheme provide guaranteed returns?
What is the offer period for the CIS?
State the period for issue of Unit Certificates by a Collective Investment Management Company?
What is the penal interest payable by the person registered under a Collective Investment Scheme on his failure to refund the amount within the specified period to the applicant investor.
(Dec 23 – 4 Marks)
Q. Zenith Wealth Management is a leading collective investment management company, dedicated to delivering exceptional financial services. Its focus remains on data-driven strategies and personalized solutions. In this context, explain general provisions of collective investment company in terms of :
Maintaining proper books of accounts and records, etc.
Dispatch of warrants and proceeds. (Dec, 24 - 3+2=5 marks)
Q. Write short note on:
Quarterly disclosures by a Collective Investment Management Company (June, 24 – 3 Marks)