MULTIPLE-CHOICE QUESTIONS WITH ANSWERS RELATED TO THE SEBI (DELISTING OF EQUITY SHARES) REGULATIONS, 2021
What does SEBI stand for in the context of Indian financial regulations?
a) Securities and Exchange Board of India
b) Securities Evaluation and Business Intelligence
c) Stock Exchange Bureau of India
d) Securities Entity Board of Investments
Answer: a) Securities and Exchange Board of India
When were the SEBI (Delisting of Equity Shares) Regulations, 2021 introduced?
a) 2018
b) 2020
c) 2021
d) 2019
Answer: c) 2021
What is the primary purpose of the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To facilitate the listing of new companies on stock exchanges
b) To regulate the trading of derivative instruments
c) To regulate the process of delisting equity shares from stock exchanges
d) To regulate foreign institutional investments
Answer: c) To regulate the process of delisting equity shares from stock exchanges
Which of the following is NOT a requirement under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Obtaining approval from shareholders through a special resolution
b) Approval from SEBI for delisting proposal
c) Appointment of an independent valuer to determine the fair value of shares
d) Obtaining approval from the Reserve Bank of India (RBI)
Answer: d) Obtaining approval from the Reserve Bank of India (RBI)
What is the minimum delisting offer size mandated by SEBI (Delisting of Equity Shares) Regulations, 2021?
a) 10% of the total issued capital of the company
b) 15% of the total issued capital of the company
c) 25% of the total issued capital of the company
d) 50% of the total issued capital of the company
Answer: b) 15% of the total issued capital of the company
Which entity is responsible for regulating the delisting process according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Ministry of Finance
b) Reserve Bank of India
c) Securities and Exchange Board of India (SEBI)
d) National Stock Exchange (NSE)
Answer: c) Securities and Exchange Board of India (SEBI)
What is the maximum time frame within which the delisting process must be completed after approval from shareholders according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) 6 months
b) 12 months
c) 18 months
d) 24 months
Answer: b) 12 months
Which of the following statements regarding the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021, is true?
a) The promoter’s shareholding must not exceed 75% after delisting.
b) The delisting offer must remain open for a minimum of 15 days and a maximum of 30 days.
c) Shareholders who do not participate in the delisting offer are forced to sell their shares.
d) Delisting is permitted only for companies listed on the National Stock Exchange (NSE).
Answer: b) The delisting offer must remain open for a minimum of 15 days and a maximum of 30 days.
What is the minimum acceptance ratio required for a successful delisting offer as per the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) 50%
b) 66%
c) 75%
d) 90%
Answer: c) 75%
Which of the following factors is NOT considered by the independent valuer while determining the floor price of shares during the delisting process?
a) Net worth of the company
b) Past trading prices of the shares
c) Future earnings potential of the company
d) Book value of the shares
Answer: c) Future earnings potential of the company
Which of the following entities is responsible for monitoring compliance with the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Ministry of Corporate Affairs
b) National Stock Exchange (NSE)
c) Securities and Exchange Board of India (SEBI)
d) Reserve Bank of India (RBI)
Answer: c) Securities and Exchange Board of India (SEBI)
In case of non-compliance with the SEBI (Delisting of Equity Shares) Regulations, 2021, what action can SEBI take against the company?
a) Fine the company
b) Suspend trading of the company’s shares
c) Deregister the company from the stock exchange
d) All of the above
Answer: d) All of the above
What is the role of the merchant banker in the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To determine the floor price for delisting
b) To advise the company on the delisting process
c) To manage the delisting offer
d) All of the above
Answer: d) All of the above
Which of the following statements about reverse book-building under the SEBI (Delisting of Equity Shares) Regulations, 2021, is correct?
a) It involves buying shares from the market to increase the shareholding.
b) It involves selling shares in the market to decrease the shareholding.
c) It involves determining the price at which shareholders are willing to sell their shares.
d) It involves determining the price at which shareholders are willing to buy additional shares.
Answer: c) It involves determining the price at which shareholders are willing to sell their shares.
Which of the following shareholders cannot participate in the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Promoters
b) Institutional investors
c) Retail investors
d) None of the above
Answer: d) None of the above
What is the minimum public shareholding required for a company to be eligible for delisting under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) 25%
b) 10%
c) 15%
d) 5%
Answer: a) 25%
Which of the following statements about the delisting process is true according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The company can delist its shares without obtaining approval from shareholders.
b) The delisting offer can be withdrawn by the company at any time before the offer closes.
c) The delisting offer must be made at a price higher than the prevailing market price.
d) Minority shareholders have the right to reject the delisting offer.
Answer: b) The delisting offer can be withdrawn by the company at any time before the offer closes.
What happens if the delisting offer fails to achieve the minimum acceptance ratio as per the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The company is automatically delisted.
b) The company must increase the offer price and relaunch the delisting offer.
c) The delisting offer is considered unsuccessful, and the company cannot attempt delisting for the next 5 years.
d) Shareholders who participated in the offer are compensated by the company.
Answer: c) The delisting offer is considered unsuccessful, and the company cannot attempt delisting for the next 5 years.
Who is responsible for appointing the independent valuer to determine the floor price of shares during the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) SEBI
b) The company
c) Stock exchanges
d) The merchant banker
Answer: b) The company
Under the SEBI (Delisting of Equity Shares) Regulations, 2021, what is the role of the promoter during the delisting process?
a) To vote against the delisting proposal
b) To ensure fair treatment of minority shareholders
c) To ensure maximum shareholder participation in the delisting offer
d) To manipulate the share price during the offer period
Answer: b) To ensure fair treatment of minority shareholders
Which of the following statements regarding the floor price determination under the SEBI (Delisting of Equity Shares) Regulations, 2021, is true?
a) The floor price is determined solely based on the market price of shares.
b) The floor price cannot be lower than the book value of the shares.
c) The floor price is determined by the company’s board of directors.
d) The floor price is determined by an independent valuer appointed by the company.
Answer: d) The floor price is determined by an independent valuer appointed by the company.
What is the purpose of disclosing the exit opportunity in the public announcement of the delisting offer according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To inform shareholders about the possibility of delisting
b) To provide shareholders with an alternative exit option
c) To attract more investors to participate in the delisting offer
d) To comply with regulatory requirements
Answer: b) To provide shareholders with an alternative exit option
Which of the following events triggers the obligation of a company to consider delisting under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Increase in share price
b) Decrease in share price
c) Change in management
d) Merger with another company
Answer: d) Merger with another company
What is the consequence if the delisting offer price is higher than the floor price determined by the independent valuer under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer is considered invalid.
b) The excess amount must be refunded to the shareholders.
c) The excess amount is retained by the company.
d) The delisting offer is automatically accepted.
Answer: b) The excess amount must be refunded to the shareholders.
According to the SEBI (Delisting of Equity Shares) Regulations, 2021, who is responsible for announcing the delisting offer?
a) The company
b) SEBI
c) Stock exchanges
d) The merchant banker
Answer: a) The company
What is the objective of the public announcement of the delisting offer under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To inform shareholders about the delisting process
b) To create awareness about the company’s performance
c) To attract potential buyers for the company’s shares
d) To comply with regulatory requirements
Answer: a) To inform shareholders about the delisting process
In case of an increase in the floor price during the delisting process, what action must the company take according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Cancel the delisting offer
b) Reduce the delisting offer price
c) Increase the delisting offer price
d) Seek approval from SEBI for the new floor price
Answer: c) Increase the delisting offer price
Which of the following statements about the voting process during the delisting proposal is correct?
a) Minority shareholders cannot vote on the delisting proposal.
b) Only institutional investors are eligible to vote on the delisting proposal.
c) Promoters are not allowed to vote on the delisting proposal.
d) Shareholders vote on the delisting proposal through a special resolution.
Answer: d) Shareholders vote on the delisting proposal through a special resolution.
What is the consequence if the delisting offer fails to achieve the minimum acceptance ratio as per the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer is extended for another 30 days.
b) The company is compelled to delist its shares.
c) The delisting offer is deemed unsuccessful, and the company cannot attempt delisting for the next 1 year.
d) The company must increase the offer price and relaunch the delisting offer.
Answer: c) The delisting offer is deemed unsuccessful, and the company cannot attempt delisting for the next 1 year.
What role does SEBI play in the delisting process according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) SEBI approves the delisting offer price.
b) SEBI oversees the delisting process to ensure compliance with regulations.
c) SEBI determines the floor price for the delisting offer.
d) SEBI appoints the independent valuer for the delisting process.
Answer: b) SEBI oversees the delisting process to ensure compliance with regulations.
Which of the following statements about the delisting offer period under the SEBI (Delisting of Equity Shares) Regulations, 2021, is true?
a) The delisting offer must remain open for a minimum of 7 days.
b) The delisting offer must remain open for a maximum of 45 days.
c) The delisting offer period can be extended by the company with SEBI’s approval.
d) The delisting offer period cannot be extended under any circumstances.
Answer: c) The delisting offer period can be extended by the company with SEBI’s approval.
What is the minimum number of public shareholders required for the delisting offer to be successful under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) 50
b) 100
c) 500
d) 1000
Answer: a) 50
In the event of a conflict between the provisions of the SEBI (Delisting of Equity Shares) Regulations, 2021, and the Companies Act, 2013, which prevails?
a) SEBI (Delisting of Equity Shares) Regulations, 2021
b) Companies Act, 2013
c) Both are equally applicable
d) The decision is left to the discretion of the company’s board of directors
Answer: a) SEBI (Delisting of Equity Shares) Regulations, 2021
What is the primary purpose of the reverse book-building process in the delisting of equity shares according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To determine the floor price for the delisting offer
b) To allow shareholders to offer their shares at a price higher than the prevailing market price
c) To allow shareholders to offer their shares at a price lower than the prevailing market price
d) To determine the final price at which shareholders are willing to sell their shares
Answer: d) To determine the final price at which shareholders are willing to sell their shares
Under the SEBI (Delisting of Equity Shares) Regulations, 2021, what is the role of the public shareholders in the delisting process?
a) To approve the delisting proposal through a special resolution
b) To approve the floor price for the delisting offer
c) To determine the number of shares to be delisted
d) To set the timeline for the delisting process
Answer: a) To approve the delisting proposal through a special resolution
What is the consequence for a company that fails to comply with the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The company’s shares are automatically delisted.
b) The company is fined by SEBI.
c) The company’s management is removed.
d) The company may face legal action and penalties.
Answer: d) The company may face legal action and penalties.
Which of the following is NOT a factor considered by SEBI while granting approval for the delisting offer?
a) Fair treatment of minority shareholders
b) Compliance with accounting standards
c) Prevailing market conditions
d) Potential impact on the company’s liquidity
Answer: b) Compliance with accounting standards
What is the role of the independent valuer appointed during the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To determine the final price at which shareholders are willing to sell their shares
b) To provide an opinion on the fairness of the delisting offer price
c) To evaluate the financial performance of the company
d) To audit the company’s financial statements
Answer: b) To provide an opinion on the fairness of the delisting offer price
Which of the following statements about the delisting process is true according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer must be approved by a simple majority of shareholders.
b) The delisting offer price must be equal to or lower than the floor price determined by the independent valuer.
c) Shareholders who do not participate in the delisting offer are entitled to a higher share price.
d) The delisting offer can only be made by the company’s promoters.
Answer: b) The delisting offer price must be equal to or lower than the floor price determined by the independent valuer.
What is the purpose of conducting due diligence before initiating the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To ensure compliance with regulatory requirements
b) To identify potential risks and liabilities
c) To determine the fair value of the company’s shares
d) All of the above
Answer: d) All of the above
What is the role of the stock exchanges in the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To determine the floor price for the delisting offer
b) To approve the delisting proposal
c) To facilitate trading of shares during the offer period
d) To appoint the independent valuer
Answer: c) To facilitate trading of shares during the offer period
Which of the following entities is responsible for ensuring transparency and fairness in the delisting process according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Promoters of the company
b) Institutional investors
c) Independent valuer
d) SEBI
Answer: d) SEBI
What is the primary objective of the SEBI (Delisting of Equity Shares) Regulations, 2021, concerning minority shareholders?
a) To provide them with an opportunity to exit the company at a fair price
b) To force them to sell their shares during the delisting process
c) To increase their shareholding in the company
d) To prevent them from participating in the delisting offer
Answer: a) To provide them with an opportunity to exit the company at a fair price
What happens if the delisting offer price is lower than the floor price determined by the independent valuer under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer is considered invalid.
b) The excess amount must be refunded to the shareholders.
c) The delisting offer is automatically accepted.
d) The company must increase the offer price and relaunch the delisting offer.
Answer: d) The company must increase the offer price and relaunch the delisting offer.
What is the purpose of appointing an independent valuer during the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) To determine the fair value of the company’s shares
b) To oversee the trading of shares during the offer period
c) To facilitate communication between the company and shareholders
d) To approve the delisting proposal
Answer: a) To determine the fair value of the company’s shares
Which of the following statements about the delisting process is true according to the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer can be made only by the company’s promoters.
b) Shareholders who do not participate in the delisting offer are forced to sell their shares.
c) The delisting offer must remain open for a minimum of 30 days.
d) Minority shareholders have the right to reject the delisting offer.
Answer: b) Shareholders who do not participate in the delisting offer are forced to sell their shares.
What is the consequence for a company if it fails to obtain the minimum acceptance ratio for the delisting offer under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) The delisting offer is deemed unsuccessful, and the company cannot attempt delisting for the next 3 years.
b) The company is automatically delisted.
c) The company must increase the offer price and relaunch the delisting offer.
d) The company must obtain approval from SEBI for the new floor price.
Answer: a) The delisting offer is deemed unsuccessful, and the company cannot attempt delisting for the next 3 years.
What is the significance of the floor price in the delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) It represents the maximum price at which shareholders can offer their shares.
b) It serves as a reference point for determining the offer price.
c) It indicates the minimum price at which the delisting offer must be made.
d) It determines the voting rights of shareholders during the delisting proposal.
Answer: c) It indicates the minimum price at which the delisting offer must be made.
Which of the following factors influences the floor price determination under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) Shareholder demographics
b) Prevailing market conditions
c) Company’s advertising budget
d) Government policies
Answer: b) Prevailing market conditions
How does SEBI ensure that the delisting process is fair and transparent under the SEBI (Delisting of Equity Shares) Regulations, 2021?
a) By appointing an independent valuer to determine the floor price
b) By monitoring compliance with regulations
c) By facilitating communication between the company and shareholders
d) By conducting due diligence on the company’s financial statements
Answer: b) By monitoring compliance with regulations