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Securities Laws and Compliances

December 2008

This Paper has 48 answerable questions with 0 answered.

Roll No

Time allowed : 3 hours MaximTotal number of questions : 8 Total number of p

PART A

(Answer Question No.1 which is compulsory

andany three of the rest from this part)

1. (a) State, with reasons in brief, whether the following statements are true or false :

(i) Sweatequity sharesare allotted toemployeesof a company as gift for their performance.

(ii) Continuing disclosure by listed companies under the SEBI Takeover Code affects the market priceof companysshares.

(iii) In case of rollingsettlement, the delivery of funds andsecuritiesis settled on T+2 basis.

(iv) The CentralGovernmentcannot privately place the government securities with the Reserve Bank

of India.

(v) Listing of securities with stock exchanges is a matter of great importance.

(2 marks each)

(b) Choose the most appropriate answer from the given options in respect of the following :

(i) The responsibility for regulating the securities market is not shared by the(a) SEBI

(b) Reserve Bank of India(c) Stock Exchanges(d) Ministry of Corporate Affairs.

(ii) The mechanism for employees to report to the management certain events like, unethical

behaviour, suspected fraud or violation of the companys code of conduct is known as

(a) Whistle blower policy(b) Surveillance action

(c) Market abuse

(d) Snap investigation.

(iii) The money market instrument which is issued in the form of a promissory note is called

(a) Commercial bill(b) Commercial paper

(c) Treasury bill

(d) Unit issued by a money market mutual fund (MMMF).

(iv) Before 1992, the authority which used to regulate and deal with the stock market was the(a) Reserve Bank of India

(b) Controller of Capital Issues

(c) Registrar of Companies

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(d) SEBI.

(v) Stock brokers and subbrokers are required to be registered with the

(a) SEBI

(b) Stock exchanges(c) Registrar of Companies

(d) Both (a) and (b).

(1 mark each)

2. (a) Write short notes on the following :

(i) Securities lending

(ii) Fungibility

(iii) Custodian of securities.

(3 marks each)

(b) Expand the following abbreviations :

(i) OMO

(ii) FSO

(iii) STR.

(1 mark each)

(c) What are the securities which are not available for buyback?

(3 marks)

3. (a) Distinguish between any two of the following :.

(i) Primary market and secondary market.

(ii) Close ended schemes and open ended schemes.

(iii) Disaster bonds and dual convertible bonds.

(3 marks each)

(b) "Capital market intermediaries are a vital link between the SEBI and investors in a public issue."

Comment.

(5 marks)

(c) Explain the following grading scales for healthcare institutions given by CRISIL :

(i) Grade A

(ii) Grade B

(iii) Grade C

(iv) Grade D.

(1 mark each)

4. (a) What are the obligations of a capital market intermediary under the Prevention of Money Laundering

Act, 2002 ?

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(5 marks)

(b) List out any four clauses of listing agreement.

(5 marks)

(c) "Depository system is a boon to capital market and investors, both." Elucidate the statement and bring

out the advantages of the dematerialisation of securities.

(5 marks)

5. (a) Define NAV and offer price. If Rahul invests Rs.10,000 in a scheme that charges 2% front end load

at an NAV of Rs.10 per unit, what shall be the public offer price?

(5 marks)

(b) What are the prerequisites foroption trading? Explain the issues connected with option trading.

(5 marks)

(c) Explain the concept of collective investment scheme. State briefly the obligations of trustees.

(5 marks)PART B

(Answer ANY TWO questions from this part.)

6. (a) What is initial public offering (IPO) grading ? Explain the procedure for IPO grading.

(5 marks)

(b) What is green shoe option? Explain its significance.

(5 marks)

(c) List out the various approvals required for issuance of Global Depository Receipts (GDRs) and the

documentation required therefor.(5 marks)

(d) Explain the procedure adopted for approval of basis of allotment by the stock exchanges.

(5 marks)

7. (a) Explain any three of the following terms relating to debt market in India :

(i) Benchmarked instruments.

(ii) Inflation linked bonds

(iii) Pass through certificates

(iv) Floating interest rate.(2 marks each)

(b) What is meant by the following in a public issue :

(i) Subscription list

(ii) Issue opening date.

(iii) Mandatory collection centre?

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(3 marks each)

(c) What is the investor education and protection fund (IEPF) ? Briefly explain its activities as stipulated

under the IEPF Rules.

(5 marks)

8. (a) What do you understand by fast track issues? Explain in brief the provisions related to fast trackissues.

(6 marks)

(b) Write short notes on the following:

(i) Foreign currency convertible bonds (FCCBs)

(ii) Overseas depository bank.

(iii) Prohibition of certain dealings in securities under the SEBI Regulations.

(3 marks each)

(c) What are the requirements for making investment in Indian Depository Receipts (IDRs)?(5 marks)

Securities Laws and Compliances June 2009

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Dec 2009

Securities Laws and Compliances

This Paper has 47 answerable questions with 0 answered.

Roll No

Time allowed : 3 hours MaximTotal number of questions : 8 Total number of p

PART A

(Answer Question No.1 which is compulsoryandany three of the rest from this part)

1. (a) State, with reasons in brief, whether the following statements are true or false :

(i) Derivatives are contracts which do not derive their value from any assets.

(ii) Trustees are required to disclose the basis of calculation of repurchase price and NAV of various

schemes ofmutualfund.(iii) Participatory notes are derivative instruments.

(iv) Underwriter means a person who engages in the business of selling of an issue ofsecuritiesof abody corporate.

(v) The collective investment management company is not permitted to launch any scheme for the

purpose ofinvestingin securities.

(2 marks each)

(b) Choose the most appropriate answer from the given options in respect of the following :

(i) A company cannot buy-back the securities from

(a) Free reserves

(b) Securities premium account

(c) Borrowed money

(d) Proceeds of fresh issue.

(ii) Duration of future contract on NSE is

(a) One month

(b) Two months

(c) Three months

(d) Six months.

(iii) Certificate of deposits are issued in the form of(a) Bill of exchange

(b) Usance bill of exchange

(c) Usance promissory notes

(d) Term deposit.

(iv) Venture capital funds are regulated by

(a) RBI

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(b) SEBI

(c) Stock exchange

(d) Ministry of Corporate Affairs.

(v) FCCBs are unsecured and carry interest at

(a) Variable rate(b) Fixed rate

(c) Floating rate

(d) Not determined.

(1 mark each)

2. (a) Distinguish between any two of the following :

(i) French auction and Dutch auction.

(ii) Cut off yield and cut off price.

(iii) Initial margin and maintenance margin.

(4 marks each)

(b) "Certain securities are not available to a company for buyback." Explain.

(4 marks)

(c) Expand the following :

(i) FCCB

(ii) CIS

(iii) SPN.

(1 mark each)

3. (a) Write short notes on any fourof the following :

(i) Dual option warrants

(ii) Securities Appellate Tribunal

(iii) Escrow account

(iv) Hybrid instrument

(iv) Exchange traded fund.

(v) Exchange traded fund.

(2 marks each)

(b) Explain the procedure for grant of registration certificate to venture capital fund by SEBI and effect ofrefusal to grant the certificate.

(4 marks)

(c) Explain the term demat. State the benefits of demat securities.

(3 marks)

4. (a) What action lies against SEBI registered intermediaries in case of default/violation under the SEBI Act,

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1992 ?

(4 marks)

(b) Briefly discuss the guidelines for issue of commercial paper.

(4 marks)

(c) "Corporate Governance is the application of best management practices." Comment.

(4 marks)

(d) Explain the following credit rating symbols

(i) ER1A

(ii) ER1C

(iii) M1.

5. (a) Explain the following terms related tocapital market:

(i) Incubators

(ii) Angel investors

(iii) Private equity players.

(2 marks each)

(b) Ajay purchases 8.4% Government of India Bond, 2018 of face value of Rs.20 lakh @ Rs.102.50 for

every unit of security having face value of Rs.100. The settlement is due on 13th October, 2009. Whatis the amount to be paid by Ajay ? (Assuming that interest is payable on 13th May and 13th November

every year.)

(5 marks)

(c) Discuss the regulatory framework governing primary market intermediaries.

(4 marks)

PART B

(Answer ANY TWO questions from this part.)

6. (a) What is Indian Depository Receipt (IDR) ? What are eligibility criteria for issue of IDRs ?

(5 marks)

(b) What is price stabilization fund?

(5 marks)

(c) Write a note on due diligence in the process of public issue of securities.

(5 marks)

(d) State the powers and functions of the Ombudsman under the SEBI (Ombudsman) Regulations, 2003.

(5 marks)

7. (a) What do you understand by offering circular forEuroissue ? Mention any five aspects which should

be covered in the offering circular.

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(5 marks)

(b) What are the disclosures in the Directors Report as per the SEBI (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999 ?

(5 marks)

(c) Explain the procedure of bidding in book building issue.

(5 marks)

(d) Discuss the approvals required from various authorities in issuance ofGDRsand FCCBs.

(5 marks)

8. (a) "SEBI expects the investors to make investments with their eyes and ears open." Comment.

(5 marks)

(b) Discuss the end use of external commercial borrowings under approval route.

(5 marks)

(c) Discuss the various formalities to be complied with for the issue of bonus shares under the SEBI(Disclosure andInvestorProtection) Guidelines, 2000.

(10 marks)

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Securities Laws and Compliances

December 2009

This Paper has 48 answerable questions with 0 answered.

Roll NoTime allowed : 3 hours MaximTotal number of questions : 8 Total number of p

PART A

(Answer Question No.1 which is compulsoryandany three of the rest from this part)

1. (a) State, with reasons in brief, whether the following statements are true or false :

(i) Cumulativeconvertible preference sharesare not hybrid instruments.

(ii) Equity linked saving schemes have lockinperiod of five years.

(iii) A depository is an organisation like Reserve Bank of India.

(iv) In basket trading system, investor buys or sells all the fifty scrips in one go.

(v) Hedge funds employ their funds for speculative trading.

(2 marks each)

(b) Rewrite the following sentences after fillingin the blank spaces with appropriate word(s)/figure(s) :

(i) Direct and indirect control of virtually all aspects of securities trading is provided by _________.

(ii) Tracking stockis a type of common stock that tracks depending on_________.

(iii) CAMEL model encompasses_________.

(iv) As per SEBI regulations, capital adequacy requirement for merchant banker shall be a net-worth ofnot less than Rs._______.

(v) _________are imposed on the scrip which witness abnormal price/volume movements.

(1 mark each)

2. (a) Write short notes on the following:

(i) Corporate restructuring

(ii) Trade to trade

(iii) Margin trading

(iv) Securities Appellate Tribunal.

(2 marks each)

(b) Expand the following abbreviations:

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(i) DVP

(ii) EDIFAR

(iii) OMO.

(1 mark each)

(c) What are the real estate mutual fund schemes? Explain their features.

(4 marks)

3. (a) Explain any two of the following terms in relation to securities reforms and developments in ourcountry:

(i) Corporate governance

(ii) Financial disclosures

(iii) Rolling settlement.

(3 marks each)

(b) Write a note on treasury bills.

(5 marks)

(c) Explain briefly the following:

(i) BOLT

(ii) NEAT.

(2 marks each)

4. (a) Distinguish between any two of the following :

(i) Naked debentures and secured debentures.

(ii) Industrial revenue bonds and commodity bonds.

(iii) Indexed rate notes and extendable notes.

(3 marks each)

(b) Describe briefly the risks involved in mutual funds.

(4 marks)

(c) What do you mean by dematerialisation of securities? State its benefits.

(5 marks)

5. (a) Discuss the various functions of price monitoring.

(5 marks)

(b) State the procedure for buyback of securities through stock exchange.

(5 marks)

(c) Discuss the norms for registration of portfolio managers with the Securities and Exchange Board of

India (SEBI).

(5 marks)

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PART B

(Answer ANY TWO questions from this part.)

6. (a) Explain the meaning of any two of the following in the context of international capital market:

(i) Domestic custodian bank(ii) Global depository receipts.

(iii) Overseas depository bank.

(3 marks each)

(b) What are the conditions for voluntary delisting of securities?

(4 marks)

(c) "In issuance ofGDRs/FCCBs, premarketing exercise is a tool through which the syndicate members

evaluate the prospects of the issue." Comment.

(5 marks)

(d) Who can access external commercial borrowings (ECBs) under automatic route as per Reserve Bank

of India?

(5 marks)

7. (a) Discuss briefly the provisions of the SEBI (Prohibition of Fraudulent and Unfair Practices Relating

toSecuritiesMarket) Regulations, 1995 related to

(i) Misleading statements;

(ii) Market manipulations;

(iii) Dealings in securities; and

(iv) Prohibition on certain dealings in securities.

(10 marks)

(b) What are the common grievances of investors in India ? State the authorities which can be approached

by an investor for redressal of these grievances.

(10 marks)

8. Attempt any four of the following :

(i) "PAN has to be the sole identifier number for all transactions in the securities market." Comment.

(5 marks)

(ii) State the activities stipulated under the Investor Education and Protection Fund (Awareness andProtection of Investors) Rules, 2001.

(5 marks)

(iii) Explain the regulatory framework of debt market in India.

(5 marks)

(iv) What is the lock-in-period requirement for promoters contribution ?

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(5 marks)

(v) What are the rights of securities-holders in case of compulsory delisting of securities?

(5 marks)

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Securities Laws and Compliances

June 2010

This Paper has 47 answerable questions with 0 answered.

Roll No

Time allowed : 3 hours MaximTotal number of questions : 8 Total number of p

PART A

(Answer Question No.1 which is compulsory

andany three of the rest from this part)

1. (a) State, with reasons in brief, whether the following statements are correct or incorrect:

(i) Capital marketis wider than securities market.

(ii) Mandatory client code facilitates market surveillance.

(iii) CAMEL model is used for rating of banking companies.(iv) Aforeign currencyconvertible bond is a quasi-debt instrument.

(v) The placement memorandum is to be issued for private circulation only after the expiry of 21 days

of its submission to SEBI.

(2 marks each)

(b) Re-write the following sentences after filling-in the blank spaces with appropriate words(s)/figure(s) :

(i) Credit ratingis considered more relevant for gradation of ___________.

(ii) Clearing corporation deals with ___________.

(iii) Securitiesin ___________ are not available for buy-back until the period expires.(iv) Indianmoney marketis getting integrated with the global market through ____________.

(v) ____________ is a stabilization tool for post-listing price of newly issued shares.

(1 mark each)

2. (a) Write short notes on the following :

(i) Mortgage backed securities

(ii) Basket trading system

(iii) Market abuse

(iv) Debt for equity swap.(2 marks each)

(b) Expand the following abbreviations :

(i) M C F S

(ii) SPDR

(iii) WMA.

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(1 mark each)

(c) Explain the investment criteria for a foreign venture capital fund in India.

(4 marks)

3. (a) Explain the following terms related to capital market :

(i) Commodity pool

(ii) Depository participant.

(2 marks each)

(b) Explain the following terms related to money market :

(i) Auction

(ii) Primary dealer.

(2 marks each)

(c) Write a brief note on market making.

(3 marks)

(d) Primary market is of great significance to the economy. Comment.

(4 marks)

4. (a) Distinguish between any two of the following :

(i) Funds pay-in and funds pay-out.

(ii) Merchant banker and portfolio manager.

(iii) Commercial bills and commercial papers.

(3 marks each)

(b) What is a self-regulatory organisation ? What are its functions and obligations?

(5 marks)

(c) Discuss the factors generally considered by credit rating agencies for the rating of manufacturing

companies.

(4 marks)

5. (a) Explain briefly the responsibilities and obligations of a debenture trustee.

(4 marks)

(b) Explain briefly the broad framework for short selling.

(4 marks)(c) The redemption price of a mutual fund unit is Rs.48 while the front-end load and back-end load charges

are 2% and 3% respectively. You are required to calculate

(i) Net asset value per unit; and

(ii) Public offer price of the unit.

(7 marks)

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P A R T B

(Answer ANY TWO questions from this part.)

6. (a) IPO grading is a service aimed at facilitating the assessment of the equity issue offered to the public.

Discuss.

(4 marks)

(b) Define fast track issue. List out the conditions to make a fast track issue.

(4 marks)

(c) What are the eligibility norms for public issue by an unlisted company ?

(4 marks)

(d) Briefly explain the following terms related to debt market :

(i) Pass through certificates

(ii) Benchmarked instruments

(iii) Inflation linked bonds

(iv) Floating interest rate.

(2 marks each)

7. (a) What is due diligence in the process of public issue of securities ? Explain its scope and significance.

(4 marks)

(b) What are the compliances under the listing agreement for Indian depository receipts (IDRs) relating to

appointment of Company Secretary and undertaking of due diligence of Registrar and Transfer Agent(RTA), etc. ?

(4 marks)

(c) State the conditions required to be fulfilled for conversion of external commercial borrowings (ECBs)

into equity.

(4 marks)

(d) You are the Company Secretary of Great India Ltd. Prepare a Board note outlining various

requirements of SEBI guidelines for rights issue and list out the major steps involved in rights issue.

(8 marks)

8. (a) What are the legal provisions for investor protection with regard to

(i) misstatements in a prospectus; and

(ii) failure to send financial statements ?

(5 marks)

(b) Briefly explain the principal documents involved in issuance of global depository receipts (GDRs) andforeign currency convertible bonds (FCCBs).

(5 marks)

(c) Can an issuer company offer specified securities at different prices ? What are the conditions laid down

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under the SEBI investor protection guidelines with regard to differential pricing of securities ?

(5 marks)

(d) What is book building ? What is the difference between fixed price process and book building

process ?

(5 marks)