CASELECT 1: ABC Ltd., issued prospectus for the subscription of its shares for Rs. 500 crores in 2017. The issue was oversubscribed by 200 times. The company issued shares to all the applicants on pro-rata basis Later SEBI, inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of Rs. 15 crores and banned its three executive directors for dealing in securities market for three years.
Identify the function and its type performed by SEBI in the above case. (1 Mark)
HINT: Protective Function.
CASELECT 2: Deepak Ltd., has been manufacturing cycles since 2010. Their market share in this field is 35%. They decided to introduce new cycles with advanced gear systems in 2015. For the same they estimated their financial requirements to be Rs. 20 crore. They decided to raise the same through a limited number of sophisticated investors. Identify this kind of issue? (1 Mark)
HINT: Private Placement.
CASELECT 3: Supriya's grandmother who was unwell, called her and gave her a gift packet.
Supriya opened the packet and saw many crumpled share certificates inside. Tier grandmother told her that they had been left behind by her late grandfather.
As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.'
(a) Identify and state the process.
(b) Also give two reasons to Supriya why dealing with shares in physical form had been stopped. (1+2 Marks)
(b) Problems with dealing in physical form:
(ii) Fake/forged transfers.
(iii) Transfer delays.
(iv) Paper work associated with share certificates or debentures held in physical form.
CASELECT 4: Shelly's father has gifted her shares of a Blue Chip Steel Company, with which he had been working. The securities were in physical form. She already has a bank account and does not possess any other forms of securities. She wished to sell the shares and approached a registered broker for the purpose.
Mention any six detail which she will have to provide for signing the broker client agreement. (3 Marks)
(i) PAN number (mandatory).
(ii) Date of birth.
(iii) Residential status.
(iii) Educational qualifications.
(v) Bank account details.
(vi) Depository account details.
CASELECT 5: During summer vacations, Sameer planned to visit Europe for a month. So, he visits a nearby branch of 'Grindlays Bank' to withdraw Rs. 12 lakhs from his account in order to pay the travel agent. In the bank, he observes that a large number of customers are present to make withdrawals, because it is an perfect time to make foreign visit. After sometime, he overhears one of the banker telling his colleague that, "Today 'Grindlays Bank' is likely to fall short of cash and to maintain its cash reserve ratio it will have to approach another bank."
Identify and Explain the instrument that 'Grindlays Bank' will use to meet its short term requirements of funds. (3 Marks)
HINT: Call Money.
CASELECT 6: Mr. Ramanish was holding 1,00,000 equity shares of Infosys Limited. To raise the funds, the company offered him shares, 1/5 of the shares held by him at a price Rs. 566 when the market price was Rs. 966, which he accepted. As the shares were in physical form, he contacted a broker to convert them into electronic form. After a few years, he decided to sell his holdings to help the poor farmers affected due to floods.
On the basis of the given information about Ramanish, answer the following questions:
(a) Identify the method of issuing further equity shares to Mr. Ramanish.
(b) If Mr. Ramanish signed his contract note to sell his shares on Monday, on which day, his deal would be settled.
(c) State the values which Mr. Ramanish has communicated to the society by selling his shares for the poor farmers. (3 Marks)
(a) Right Issue.
(b) T+2 days.
(c) Social Responsibility.
CASELECT 7: The directors of Purity Water Purifiers Limited anticipated with the entry of online business firms to offline mode, the fortune of the company would be severely affected and the prices of shares would decline. A director, Mr. Verma was holding large quantity of shares. To protect himself from the brunt of loss, he contacted his friend who was a wellknown broker, to help him to increase the price of shares with a rumour that company is going to buy its major competitor. Both agreed to share the gains on the sale of securities. The price of the shares shot up and Mr. Verma sold his holdings and shared the gains with Iris friend. This information came to the notice of Securities and Exchange Board of India (SEBI) that share prices of the company were manipulated by some share brokers in connivance with the directors of the company. SEBI took legal action against the guilty director.
On the basis of the given information about Purity Water Purifiers Limited, answer the following questions:
(a) Name and explain the malpractice adopted by Mr. Verma.
(b) Identify the function initiated when SEBI took legal action against the guilty director. (3 Marks)
(a) Price Rigging.
(b) Protective Function.
CASELECT 8: The Trading Procedure on Stock Exchange has been replaced by on-line screen based electronic trading system. This is mainly done to eliminate problems like theft, forged transfers, delays and paper work associated with share certificates in physical form. This is a process where securities held by the investor in the physical form are cancelled and the investor is given an electronic entry or number so that he can hold it as an electronic balance in an account. This has increased the equity cult among the people.
On the basis of the given information about stock exchange, answer the following questions:
(a) Identify and state the process where securities held in the physical form are cancelled and the investor is given an electronic entry.
(b) What is the most important requirement for the process identified in (a)?.
(c) State any two values which you think have enhanced the equity cult in the society. (4 Marks)
(b) Open a 'Demat Account' with a depository participant.
(c) Values: Fair dealings and transparency.
CASELECT 9: Ace Buildcon Ltd., a small real estate company has now evolved into a fullfledged turnkey solution provider with activities ranging from substation, internal and external electrification for conventional as well as high end solutions. With a highly- passionate team of engineers on board, Ace Buildcon Ltd., believes in meeting 'customer-expectations'. The company needs large amount of funds to expand its business. Recently, it was revealed that the directors of the company have used price sensitive information for their own personal interest adequate public disclosures were also not made. SEBI is considering action against these directors.
On the basis of the given information about Ace Buildcon Ltd., answer the following questions:
(a) Name the term used for trading malpractice done by the directors of this company.
(b) Identify any two values that the company should have adhered to in order to gain the trust of its investors,
(c) Also, state the other trading malpractices adopted by the organisation which is prohibited by SEBI. (4 Marks)
(a) Insider Trading.
(i) Protection of investors' interests.
(iii) Efficiency of information.
(iv) Efficiency of operations.
(c) Price Rigging.
CASELECT 10: Sheela Foam Ltd. is a leading manufacturer of mattresses and other foambased home comfort products in India. Company sells their products under the brand Sleepwell, Feather Foam and Lamiflex. Sheela Foam offers mattresses, pillows, mattress protectors, bolsters, back cushions, sofa-cum beds, bed-sheets and baby care sheets, as well as furniture cushioning products. Company's products are mainly used in residential purpose, hotels, hospitals and educational institutions. Company have pan India distribution network that consists of over 100 exclusive distributors, over 2,000 exclusive retail dealers and over 2,500 multi-brand outlets, as on March 31, 2018 Sheela Foam Ltd., has decided to approach capital market through a mix of offer for sale of Rs. 400 crore shares and an ordinary issue of Rs. 200 crore shares.
On the basis of the given information about Sheela Foam Ltd., answer the following questions:
(a) Name and explain the segment of capital market being approached by the company.
(b) Identify and explain the two methods of floatation to be used by the company to raise the required capital. (4 Marks)
(a) Primary Market,
(b) Issue through prospectus and offer for sale.
CASELECT 11: XYZ Ltd., invited public to subscribe for equity shares of Rs. 100 each. Before the issue, Managing Director of the company has a deal with foreign company to amalgamate just after this issue. The Managing Director did not disclose this important fact in prospectus. It was highly objected later by shareholders. Concerned Regulatory Authority took action and the Managing Director was punished and penalized as per regulations.
On the basis of the given information about XYZ Ltd., answer the following questions:
(a) Identify the regulatory authority mentioned above.
(b) Enumerate and explain three other functions performed by this regulatory authority. (4 Marks)
(b) Protective, regulatory and developmental functions.
CASELECT 12: The National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, located in Mumbai. NSE was established in 1992 as the first demutualized electronic exchange in the country. NSE was the first exchange in the country to provide a modem, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the length and breadth of the country. National Stock Exchange has a total market capitalisation of more than US $ 1.41 trillion, making it the world's 12th-largest stock exchange NSE offers trading, clearing and settlement services in equity, equity derivatives, debt and currency derivatives segments. It is the first exchange in India to introduce electronic trading facility thus, connecting together the investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines spread over more than 2000 cities across India.
On the basis of the given information about NSE, answer the following questions:
(a) Name the organisation that regulates the working of stock exchanges in India.
(b) State any four functions performed by National Stock Exchange of India Limited. (5 Marks)
HINT: (a) SEBI.
(b) (i) Liquidity and marketability to existing securities.
(ii) Pricing of securities.
(iii) Safety of transactions.
(iv) Contributes to economic growth.
CASELECT 13: 'The essential function of this market is to facilitate transfer the transfer of investibie funds from savers to entrepreneurs seeking to establish new enterprises or to expand existing ones through issue of shares for the first time'.
Identify the market and explain any four ways of doing it. (5 Marks)
HINT: Capital Markets (Primary Market).
Methods of floatation:
(i) Offer through prospectus.
(ii) Offer for sale.
(iii) Private placement.
(iv) Rights issue; E-iop.
CASELECT 14: Harshit, earned his first salary of Rs. 25,000. He wanted to save Rs. 10,000. He started exploring various options as to where he can invest this money. Even though the money was small in nature, he still felt that he had a chance of investing it properly. Once while reading the newspaper he happened to read an article on how investment in stock market by small investors has proved to be a great boon to all of them. He decided to invest his money in it. His friend was explaining him the process of buying a share.
Can you enumerate the first five steps of doing so to Harshit? (5 Marks)
HINT: Trading Procedure in Stock Exchanges.
CASELECT 15: Incorporated in 1999, Music Broadcast Limited is the first private FM radio broadcaster in India operates under the brand name Radio City. The company operated its radio stations in 29 cities in India as of November 25, 2017. They are present in 12 out of the top 15 cities in India by population. Music Broadcast also operates 31 Web radio stations that offer Internet radio with live RJ hosted shows through Planet Radio City in 6 languages with a listenership of 12.20 million. Music Broadcast Limited is planning to launch 'Planet Radio City' mobile app that plays various stations, such as 'Radio City Freedom', 'Radio City Electronica', 'Radio City Metal', and 'Radio City Smaran' in various languages on mobile and other smart devices. In order to raise the funds for new mobile app, its directors have decided to float a public issue through prospectus. Besides, it intends to raise money to meet the floatation cost in terms of brokerage, underwriting commission, advertising etc.
On the basis of the given information about Music Broadcast Limited, answer the following questions:
(a) State the term used for the funds required to meet floatation costs?
(b) Describe briefly the short term instrument popularly used by the companies to raise for the funds required to meet floatation costs.
(c) Distinguish between the two types of financial markets that the company intends to approach to meet its financial needs. (5 Marks)
(a) Bridge Financing.
(b) Commercial Papers.
(c) Capital Market and Money Market.
CASELECT 16: Hind Pin Ltd. invited public to subscribe for equity shares of Rs. 100 each. Before the issue managing director of the company had a deal with foreign company to amalgamate two subsidiary companies of the Hind Pin Ltd. just after concluding the public issue. Managing Director did not disclose this important fact in prospectus. This aspect was highly objected, later by shareholders. The concerned regulatory authority took action and Managing director was punished and penalised as per regulations.
On the basis of above discussion about Hind Pin Ltd., answer the following questions:
(a) Identify the kind of capital market indicated in the case.
(b) Identify the Regulatory Body, mentioned above.
(c) List any three objectives of establishing the concerned regulatory authority. (5 Marks)
(a) Primary Market.
(b) Securities Exchange Board of India.
(c) The three objectives of establishing the concerned regulatory authority are:
(i) To regulate stock exchanges and the securities industry to promote their orderly functioning.
(ii) To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
(iii) To prevent trading malpractices and achieve a balance between selfregulation by the
securities industry and its statutory regulation.
CASELECT 17: Mrs. Anika Oberoi is a Charted Accountant in ARSS Infra Ltd. During the course of meeting with directors she came to know that as against the previous years, this year company is going to declare handsome dividend. After that it is observed that when such news becomes public then the share price will appreciate considerably. So, Mrs. Anika Oberoi purchased large number of company's shares before the date of annual results.
On the basis of above discussion about Mrs. Anika Oberoi, answer the following questions:
(a) Identify type of malpractice used by Mrs. Anika Oberoi.
(b) Name the authority which regulates such behaviour.
(c) Explain the three main functions of this authority. (5 Marks)
(a) Insider trading.
(c) Three main functions of this authority are:
(i) Protective Functions.
(ii) Development Functions.
(iii) Regulatory Functions.