Explanation:

Takeover is the acquisition of substantial shares or voting rights for the purpose of seeking management control of the company. In this context, the term “takeover” refers to obtaining a significant ownership stake or influence in a company by acquiring its shares or voting rights, allowing the acquiring entity to exert control over the company’s management decisions.

Explanation:

Explanation:

In case of private placement of debt securities, if the limit on the number of potential investors who can be approached is breached, it shall be deemed to be a public issue, and all requirements of a public issue shall apply.

Explanation:

Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies survives independently. “Merger” is a broader term and it denotes a combination of two or more companies to form a single entity, in which either one or both lose their identity and a new company is formed. An “Acquisition” is the purchase of one business or company by another company or other business entity.

Explanation:

The Depositories Act enables the setting up of multiple depositories in India. The Act ushered in an era of efficient capital market infrastructure, improved investor protection, reduced risks, and increased transparency of transactions in the securities market. The Act specifies, inter alia, the rights and obligations of depositories, participants, issuers and beneficial owners.

Explanation:

True. In the equity market, investors can choose to invest in stocks, which are considered riskier but offer the potential for higher returns. On the other hand, the bond market is generally considered less risky, making it a suitable choice for risk-averse investors. Bonds are debt securities that represent loans made by investors to issuers, typically governments or corporations, and they provide more predictable returns compared to the potentially volatile nature of stocks in the equity market.

Explanation:

The role of a Merchant Banker in takeovers and acquisitions of shares is outlined in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. These regulations, established by the Securities and Exchange Board of India (SEBI), provide guidelines and rules governing substantial acquisitions of shares and takeovers in the Indian securities market. They detail the responsibilities and procedures that Merchant Bankers need to follow in the context of such transactions.

Explanation:

The compliance officer has to immediately and independently report to SEBI any noncompliance observed by him.

Explanation:

The Merchant Banker has to certify that the equity shares allotted to employees, whether currently an employee or not, under an employee stock option or employee stock purchase scheme of the issuer prior to the initial public offer, if the issuer has made full disclosures with respect to such options or scheme in accordance with Part A of Schedule VI of SEBI (ICDR) Regulations.

Explanation:

Futures contracts are special types of forward contracts in the sense that they are standardized exchange-traded contracts. The exchange will set a standard for the quantity per lot which can be traded, the expiry dates etc. Futures contracts are available on certain specified stocks and indices.

Explanation:

The Competition Commission works to:
– Prevent practices having adverse effects on competition
– Promote and sustain competition in the market
– Protect the interests of consumers, and
– Ensure freedom of trade carried on by other participants in markets, in India.

Explanation:

A listed company is required to issue Preferential Shares only after obtaining approval through a special resolution passed by its shareholders. This ensures that such significant corporate decisions are made with the consent and support of the company’s shareholders, providing transparency and aligning with corporate governance principles.

Explanation:

SEBI (Issue of Capital and Disclosure Requirements – ICDR) Regulations 2009 has detailed requirements laid out with respect to disclosure and process requirements for capital market transactions by listed and unlisted companies which are in the process of listing.

Explanation:

Government bonds do not carry default risk because the government provides a guarantee for the payment of interest and the repayment of the principal amount. This is because governments are generally considered highly creditworthy and capable of fulfilling their financial obligations.

Explanation:

RBI looks at the macroeconomic conditions and decides the rate of interest to be paid on government securities as well as important factors like the Statutory Lending Ratio (SLR) and the Cash Reserve Ratio (CRR).

Explanation:

The merchant banker has to comply with the award of the Ombudsman passed under the Securities and Exchange Board of India (Ombudsman) Regulations, 2003.

Explanation:

Disinvestment transactions are generally of two types:
(1) In the nature of an offer for sale by the selling shareholder (in this case the Government of India) through the prospectus, at times this could be a combination of a fresh issue and an offer for sale or
(2) In the nature of the Offer for Sale through the Stock Exchange Mechanism.

Explanation:

As per SEBI (Substantial Acquisition of Shares and Takeovers – SAST) Regulations, 2011, an acquirer and persons acting in concert with him, who have made a public announcement under this regulation to acquire shares of a target company shall not be entitled to acquire any shares of the target company for a period of six months after completion of the open offer except pursuant to another voluntary open offer.

Explanation:

In an acquisition, the acquiring firm may offer its shares to the shareholders of the target firm, and the conversion ratio specifies how many shares of the acquiring firm will be exchanged for each share of the target firm. This ratio determines the exchange terms and helps establish the value of the acquisition for the shareholders of the target company.

Explanation:

In case of soft underwriting, the underwriter agrees to buy his commitment at a later stage only when the price of shares is known. Hard underwriting is when an underwriter agrees to buy his commitment at its earliest stage.

Explanation:

The lead merchant banker is required to submit the post-issue reports to SEBI as specified in the Regulations. The initial post-issue report shall be submitted within 3 days of closure of the issue in specified formats and the final post issue reports within 15 days of the date of finalization of basis of allotment or within 15 days.

Explanation:

The criteria for a ‘fit and proper’ person under the SEBI (Intermediaries) Regulations, 2008, include considerations such as integrity, reputation, and character; absence of convictions and restraint orders; as well as competence, which encompasses financial solvency and net worth. These criteria collectively ensure that individuals involved in intermediaries regulated by SEBI possess the necessary qualities and qualifications to maintain the integrity and credibility of the financial markets.

Explanation:

The aggregate of reservations for employees shall not exceed five percent of the post-issue capital of the issuer and the value of allotment to any employee shall not exceed two lakhs rupees.

Explanation:

As per SEBI Code of Conduct for Merchant Bankers – A merchant banker shall not divulge to anybody either orally or in writing, directly or indirectly, any confidential information about its clients which has come to its knowledge, without taking prior permission of its clients, except where such disclosures are required to be made in compliance with any law for the time being in force.

Explanation:

SEBI fees :

1.For a public issue of less than or equal to Rs. 10 crore – A flat charge of Rs. 1,00,000

2. For a public issue of more than Rs. 10 crore but less than or equal to Rs. 5000 crore – 0.1 percent of the issue size

3. For a public issue of more than Rs. 5000 crore – Rs, 5,00,00,000 (Five Crore Rupees) Plus 0.025 percent of the portion of the Issue Size in excess of Rs. 5,000 crore

Explanation:

In an issue where the merchant banker is an associate of the issuer, it is required to declare itself as a marketing lead manager, and its role is confined to the marketing of the issue. This is to ensure transparency and proper disclosure of the relationship between the merchant banker and the issuer.

Explanation:

An applicant seeking registration as a Merchant Banker must comply with various requirements, including paying registration fees, meeting capital adequacy requirements, and satisfying criteria for being considered a fit and proper person. These measures help ensure that registered Merchant Bankers are financially sound, meet ethical standards, and contribute to the overall integrity and stability of the financial markets.

Explanation:

These regulations lay down the general obligations of issuers and other intermediaries involved in the process of issue management. They provide guidelines and requirements for various aspects, including disclosures, compliance, and conduct, with the aim of ensuring transparency and fairness in the capital market.

Explanation:

According to the SEBI (Foreign Portfolio Investors) Regulations, foreign portfolio investors are allowed to trade in the derivatives segment.

Explanation:

Net Offer to Public refers to an offer of specified securities to the public, excluding reservations made for certain investor categories. It represents the portion of the issue made available to the general public after considering the reservations made for specific groups such as institutional investors, employees, or existing shareholders.

Explanation:

As per SEBI (Foreign Portfolio Investors) Regulations, 2014 – No transaction on the stock exchange shall be carried forward by Foreign Portfolio Investors.

Explanation:

Where QIPs participation to the extent of atleast 75 % of the issue size is must as an eligibility condition for an issue, this part of the issue cannot be underwritten. It means that if QIBs are not able to subscribe to atleast 75%, it will not devolve on Underwriters and the issue will fail.

Explanation:

Mergers and Acquisitions in India are regulated by the following legislations and regulators: 1. The Companies Act, 1956 2. The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 3. The Monopolies and Restrictive Trade Practices Act, 1969 4. The Foreign Exchange Management Act, 1999 5. The Reserve Bank of India and the RBI Act, 1934. 6. The Income Tax Act, 1961 7. The Competition Act 2002

Explanation:

If an offer for sale is withdrawn before its proposed opening, there is a cooling-off period of 10 trading days from the date of withdrawal before the offer can be made again. This cooling-off period is a regulatory measure to ensure stability and fairness in the securities market.

Explanation:

Offer Document is called a “Prospectus” in case of a public issue or offer for sale and a “Letter of Offer” in case of a rights issue.

Explanation:

A rights issue shall be open for subscription for a minimum period of 15 days and a maximum period of 30 days.

Explanation:

As per the SEBI (Delisting of Equity Shares) Regulations, 2009, delisting is not permissible in certain circumstances and conditions, which are –

a) Pursuant to Buy Back of equity shares or

b) Pursuant to Preferential Allotment or

c) Unless a period of 3 years has elapsed since listing or

d) Any instrument(s) which are convertible into shares that are sought to be listed are outstanding

Explanation:

Regulation 9 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 states the modes of payment for the offer price can be done through cash or by issue, exchange or transfer of listed shares in the equity share capital of the acquirer or by issue, exchange or transfer of listed secured debt instruments by issue, exchange or transfer of convertible debt securities entitling the holder thereof to acquire listed shares in the equity share capital of the acquirer.

Explanation:

The issue price of Rights Issue is decided in consultation with the lead manager and the record date is determined in consultation with the designated Stock Exchange.

Explanation:

The specified securities held by promoters and lockedin as per regulation 36 of SEBI (ICDR) Regulations may be transferred to another promoter or any person of the promoter group or a new promoter or a person in control of the issuer.

Explanation:

If the Rights issue is below Rs 10 crores, the fees payable are a flat charge of Rs 50000. If the issue is over Rs 10 crore, the fees payable is 0.05% of the Issue Size.

Explanation:

Fees payable by the issuer to SEBI with respect to every draft offer document of a public issue are : Issue Size Less than or equal to Rs. 10 crore – A flat charge of Rs. 1,00,000 Issue Size More than Rs. 10 crore but less than or equal to Rs. 5000 crore – 0.1% of the issue size Issue Size More than Rs. 5000 crore – Five Crore Rupees Plus 0.025 percent of the portion of the Issue Size in excess of Rs. 5,000 crore

Explanation:

As per the SEBI (Certification of Associated Persons in Securities Markets) Regulations, 2007, a certificate is valid for a period of three years from the date of grant or revalidation, as the case may be. After this period, individuals need to renew or revalidate their certification to continue their association in the securities markets.

Explanation:

FPO can be made through a book building process or a fixed price issue. FPO may be also made through the Fast Track Issue (FTI) process, provided certain conditions as prescribed under the SEBI ICDR Regulations are complied with.

Explanation:

SEBI (ICDR) Regulations lays down general conditions for capital market issuances like public and rights issuances, Institutional Placement Programme (IPP), Qualified Institutions Placement (QIP) etc; eligibility requirements; general obligations of the issuer and intermediaries in public and rights issuances; regulations governing preferential issues, qualified institutional placements and bonus issues by listed companies; Issue of IDRs.

Explanation:

“Merger” is a broader term and it denotes a combination of two or more companies to form a single entity, in which either one or both lose their identity and a new company is formed.

Explanation:

In order to maintain the highest level of honesty, integrity, ethics, professional judgment and keeping the interests of the investor in mind, SEBI requires that merchant bankers follow the Code of Conduct as specified in the SEBI Regulations.

Explanation:

Capital Market is divided into the Primary Market and Secondary Market whereas Money Market is classified into Organized Money Market and Unorganized Money Market.

Explanation:

Complaints arising out of issues that are covered under SEBI Act, Securities Contract Regulation Act, Depositories Act and Rules and Regulation made there under and provisions that are covered under section 26 of Companies Act are complaints dealt with by SEBI under the online system called SEBI Complaints Redress System (SCORES). Certain complaints not dealt with by SEBI like complaints falling under the purview of other regulatory bodies viz. RBI, IRDA, PFRDA, CCI, FMC, etc., or under the purview of other ministries viz., MCA, etc.

Explanation:

As per these regulations, before making the public announcement, the promoter shall appoint a merchant banker registered with SEBI. It shall be the responsibility of the promoter and the merchant banker to ensure compliance with the provisions as stated by SEBI in its regulations.

Explanation:

As per the listing agreement, a company should have a minimum paid up capital of Rs 10 crore to be eligible for listing on BSE and NSE.

Explanation:

SEBI has provided for a system for processing of investor complaints against listed companies called SEBI Complaints Redress System (SCORES). This is a centralised web based complaints redress system.

Explanation:

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 defines promoters as follows: “Promoter” includes:

(i) the person or persons who are in control of the issuer;

(ii) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public;

(iii) the person or persons named in the offer document as promoters.

Explanation:

Regulation 4 of SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations lists out the most important disclosure and other compliances required of a listed company and one of them is : – Preparation and disclosure of financial information as per applicable accounting standards. Compliance with applicable rules and regulations and timely furnishing of information is also a significant part of the requirements.

Explanation:

Minimum of 25% of eligible securities shall be allotted to MFs and insurance companies. Further, if the MFs and insurance companies do not subscribe to said minimum percentage or any part thereof, such minimum portion or part thereof may be allotted to other QIBs

Explanation:

Of the three options, as per SEBI rules, only the banker among others is connected. A person who has access to unpublished price sensitive information is an insider. A supplier cannot be connected.

Explanation:

If a Merchant Banker has been mandated to provide advisory services to any Government entity then Department of Public Enterprises (DPE) guidelines have to be kept in mind.

Explanation:

A Merchant Banker is involved in various financial activities, including takeovers, mergers, and acquisitions. These professionals play a crucial role in advising and facilitating corporate actions such as mergers and acquisitions, contributing to the efficiency and integrity of financial markets.

Explanation:

The issuer company in consultation with the merchant bankers appoint the printers who are engaged in bulk printing of the offer document and application forms. Any capable printer can be appointed to do the job.

Explanation:

One of the basic eligibility conditions for a company to make a public issue is that the issuer company must have a net worth of at least Rs 1 crore in each of the preceding 3 full years. This criterion is established to ensure a certain level of financial stability and viability before a company goes public.

Explanation:

In India, the merchant banker leading a public offer is commonly known as the “Lead Manager.” This role involves managing various aspects of the public offering process, including planning, coordination, and compliance with regulatory requirements. The Lead Manager plays a pivotal role in the successful execution of the public offer.

Explanation:

In addition to acting as an adviser, consultant, and underwriter, a Category I Merchant banker can also engage in issue management. This includes activities related to the planning, structuring, and execution of securities issues like IPOs, rights issues, and other capital market transactions. The merchant banker plays a key role in ensuring regulatory compliance and the successful execution of the issue.

Explanation:

When one category of investors is offered shares at a price different from the other category it is called differential pricing. An issuer company can allot the shares to retail individual investors and certain other categories of investors at a prescribed discount to the price at which the shares are offered to other categories of public.

Explanation:

“Green shoe option” is an option of allotting equity shares in excess of the equity shares offered in the public issue as a post-listing price stabilizing mechanism. Green Shoe Option is a price stabilizing mechanism in which shares are issued in excess of the issue size, by a maximum of 15%. “Safety net arrangement” means an arrangement provided by the issuer under which a person offers to purchase specified securities from the original resident retail individual allottees at the issue price.

Explanation:

The combined business, through structural and operational advantages secured by the merger, can cut costs and increase profits

Explanation:

As per the SEBI (ICDR) regulations, the minimum subscription to be received in a issue shall be at least 90% of the offer through the offer document.

Explanation:

From the activities mentioned above, only the activity of ‘Managing of public issues of securities’ is carried out by a merchant banker. Facilitating online trading of securities is done by Stock Exchanges/Brokers; Rating of securities is done by Credit Rating Agencies and Safekeeping of securities is done by the Custodians.

Explanation:

As per SEBI (Substantial Acquisition of Shares and Takeovers) Regulations – Regarding “the provision of escrow”, the entire amount of escrow amount deposited with the bank in cash shall be released to the acquirer upon withdrawal of the offer only if the manager to the open offer certifies the same.

Explanation:

Subject to proper compliance with the Act and the Regulations, a public issue or a rights issue may be opened: (a) Within twelve months from the date of issuance of the observations by SEBI or (b) Within three months of expiry of the period as given in the Regulations, in case SEBI has not issued its observations.

Explanation:

Documents to be submitted to the stock exchange are : – Basis of allotment – Top 100 applications – Certificate of final collection from the bankers and reconciliation statement – List of applications rejected on technical grounds – Minutes of the meeting held with the issuer, lead manager/book running lead manager and stock exchange for finalizing the basis of allotment

Explanation:

The Securities Appellate Tribunal (SAT) has been set up under the SEBI act, which looks into the appeal of any person who has been aggrieved by any order of SEBI.

Explanation:

The SEBI (Delisting of Equity Shares) Regulations allow for the delisting of equity shares without adopting the reverse book-building method if certain conditions are met. One of these conditions is that the company has 300 or fewer public shareholders, and the total value of shares held by these shareholders is not more than Rs 1 crore. This provision aims to simplify the delisting process for smaller companies with a limited number of public shareholders and a relatively low market capitalization.

Explanation:

Takeover can be by merger of a solvent acquirer with a sick company for availing the tax benefits, or else it can be acquisition of shares through direct negotiations with one who owns controlling interest or through open offer or market purchase of requisite voting rights to change the management of the company.

Explanation:

The SEBI (Issue and Listing of Debt Securities) Regulations, 2008 applies to –

(a) public issue of debt securities; and

(b) listing of debt securities issued through public issue or on private placement basis on a recognized stock exchange.

Explanation:

As per regulation 26 (1) of the SEBI ICDR Regulations, an issuer may make an initial public offer if the issuer company has net tangible assets of at least Rs 3 crore in each of the preceding three full years (of twelve months each), of which not more than 50% are held in monetary assets

Explanation:

The terms Merger and Acquisition are used synonymously, however, they are slightly different in their meanings. When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. A merger happens when two firms agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a “merger of equals”

Explanation:

‘Takeover’; is the acquisition of substantial shares or voting rights for the purpose of seeking management control of the company. The target company may be maintained as a subsidiary or division or dissolved or be merged.

Explanation:

In case of private placement of debt securities, there is a limit on the number of potential investors who can be approached, in the event this limit is breached, it shall be deemed to be a public issue and all requirements of a public issue shall apply.

Explanation:

SEBI, within 30 days from the date of receiving a satisfactory reply from the lead merchant bankers, may make its observations or specify changes, if any, on the draft offer document, especially in cases where clarification or additional information has been sought. This time frame ensures a timely review process.

Explanation:

Mergers and Acquisitions in India are regulated by the following legislations and regulators:

1. The Companies Act, 2013

2. The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

3. The Foreign Exchange Management Act, 1999

4. The Reserve Bank of India and the RBI Act, 1934.

5. The Income Tax Act, 1961

6. The Competition Act 2002

Explanation:

The SEBI (Issue of Capital and Disclosure Requirements – ICDR) Regulation, 2018 lays down general conditions for capital market issuances like public and rights issuances, etc., and all related rules, documents required, etc.

Explanation:

The SEBI ICDR Regulations require due diligence certificates to be issued by Lead Managers at various stages of an offer and the formats for such certificates have been provided in the ICDR Regulations. Lead managers are required to submit such due diligence certificate(s) to SEBI at various stages of a transaction.

Explanation:

The Registrar and Transfer Agents (RTA) have a significant role to play in a public issue of shares. Among other jobs, they have to reconcile funds with the final collection certificate received from the bankers.

Explanation:

Minimum promoters “contributions including contributions made by alternative investment funds, shall be locked-in for a period of three years from the date of commencement of commercial production or date of allotment in the public issue, whichever is later. IMP – Promoters” holding in excess of minimum promoters “contribution shall be locked-in for a period of one year; Provided that excess promoters” contribution as provided above shall not be subject to lock-in.

Explanation:

No allotment shall be made, either directly or indirectly, to any QIB who is a promoter or any person related to promoters of the issuer.

Explanation:

The merchant banker is responsible for appointing accountants and auditors who assist in reviewing and auditing financials and preparing financial statements as per SEBI (ICDR) Regulations for inclusion in the Offer Document. The merchant banker plays a key role in the issuance process and ensures compliance with regulatory requirements.

Explanation:

The lead merchant banker is required to submit the post-issue reports to SEBI as specified in the Regulations. The initial post-issue report shall be submitted within 3 days of closure of the issue in specified formats and the final post issue reports within 15 days of the date of finalization of basis of allotment or within 15 days

Explanation:

Explanation:

The RBI, or Reserve Bank of India, works with the Government to balance the growth of the country, taking into account factors such as inflation, current account deficits, and the exchange rates of the rupee in comparison to global currencies. As the central bank of India, the RBI plays a crucial role in formulating and implementing monetary policies to maintain economic stability.

Explanation:

These documents need to be maintained for a minimum period of 5 accounting years by the Merchant Banker :

(a) a copy of balance sheet as at the end of the each accounting period;

(b) a copy of profit and loss account for that period;

(c) a copy of the auditor’ report on the accounts for that period;

(d) a statement of financial position.

(e) Records and documents pertaining to due diligence exercised in pre-issue and postissue activities of issue management and in case of takeover, buy-back and delisting of securities.

Explanation:

The issuer and the merchant banker are required to ensure that specified securities are allotted and/or application money is refunded within 15 days from the date of closure of the issue. This timeframe is set to expedite the allocation process and facilitate the timely return of application money to investors.

Explanation:

Regulation 13 of SEBI ICDR states an issuer shall be eligible to issue warrants in an initial public offer subject to the following:

a) the tenure of such warrants shall not exceed eighteen months from the date of their allotment in the initial public offer;

b) a specified security may have one or more warrants attached to it.

Explanation:

The advertisement shall be made in at least 1 English, 1 Hindi national daily newspaper with wide circulation, and 1 regional language daily newspaper with wide circulation at the place where registered office of the issuer is situated, at least three days before the date of opening of the issue.

Explanation:

Activities Covered under Merchant Banking a) Managing the public issue of securities b) Underwriting the public issue c) Managing/advising on international debt/equity offerings like GDRs, ADRs, FCCBs etc. d) Private placement of securities e) Primary/satellite dealership of government securities f) Corporate advisory services such as mergers, takeovers, buybacks etc. g) Stock broking h) Advisory services for projects i) Syndication of domestic loan offerings j) International financial advisory services

Explanation:

In the SEBI (Merchant Bankers) Regulations, 1992, a Merchant Banker is defined as “any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management”.

Explanation:

Subject to proper compliances with the Act and the Regulations, a public issue or a rights issue may be opened within twelve months from the date of issuance of the observations by SEBI under regulation 25.

Explanation:

The issuer shall enter into underwriting agreement with the book runner, who in turn shall enter into underwriting agreement with syndicate members, indicating therein the number of specified securities which they shall subscribe to at the predetermined price in the event of under-subscription in the issue. If syndicate members fail to fulfil their underwriting obligations, the lead book runner shall fulfil the underwriting obligations.

Explanation:

The issuer company making a public issue or a rights issue, where the aggregate value of the specified securities offered is 50 Cr. or more, shall do so only when the draft offer document along with fees (as prescribed in the Regulations) have been filed through the lead merchant banker with SEBI.

Explanation:

The net worth of the applicant at the time of making the application for registration as a Merchant Banker includes both the paid-up capital and free reserves. This requirement ensures that the applicant has a solid financial base to engage in the business of merchant banking.

Explanation:

These regulations prescribe the general obligations to be followed by issuers and other intermediaries involved in the process of issue management. The SEBI (ICDR) Regulations, 2009, outline the requirements and guidelines for the issuance and disclosure of capital by companies in India.