CS Executive June 2024 Question Paper Capital Market and Securities Laws

FOR CS EXECUTIVE EXAM PREPARATION

CS Executive 2024
Question Paper · Capital
Market and Securities
Laws
EXAM YEAR TYPE SUBJECT

CS Executive 2024 Question Paper Capital Market and Securities Laws
DATE

June 2024

Notes · Sample Papers · Previous Year Papers · Mock Tests

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NEW SYLLABUS
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Roll No. .....................................

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Time allowed : 3 hours
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Maximum marks : 100
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Total number of printed pagesl : 12
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Total number of questions : 6
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NOTE : Answer ALL Questions.

PART–I

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1. (a) Maxgrow Ltd. (a listed company) is manufacturing the solar PV modules in India.

m reserve of ` 500 crore. It declared a dividend
It is a cash rich company with ecash
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of ` 20 per share (faceagvalue ` 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

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by the company after the expiry of prescribed period.

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Since last two months, there is heavy fluctuation in the price of the shares of Maxgrow

ag Ltd. and with very thin trading volume. The stock exchange based on its surveillance

system, took stringent action in the interest of the investors.

1/2024/CMSL/NS P.T.O.

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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) :

(i) Is block deal window also open for individual investors ?

(ii) What are the timings of executing transaction through block deal window ?

(iii) What first course of action is available to the shareholder for default of payment

of dividend by the company ?

(iv) What types of preventive surveillance restrictions can be imposed by the stock

exchance (name any four) ?

(v) Is it possible to list shares for a two year old company in the stock exchnage ?

(2 marks each)

1/2024/CMSL/NS Contd. ........

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(b) Centre for Youth Ltd. (CYL) is a section 8 company and operating since last 20

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years. Its prime area of activities is to promote education and employability amongst
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unserved population. Currently the major donations come through advertisement in social

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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

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aspects for raising of funds through Social Stock Exchnage (SSE) (with reasons) :

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.section 8 company to tap the public fund under
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(i) What are the provisions for

SEBI regulations ? l a
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(ii) Will it make any difference if CYL is a charitable trust ?

(iii) What type of instrument is allowable for CYL for fund raising ?

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(iv) What will be your answer, if 40% target population is general public ?

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(v) If CYL was debarred by Ministry of Home Affairs for carrying out its activities,

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can it still raise funds through SSE ?

a (2 marks each)

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Attempt all parts of either Q. No. 2 or Q. No. 2A

2. (a) As a company secretary, you are required to advise on the following issues :

(i) Can a foreign bank, operating in India, be registered as a depository participant ?

(ii) 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 ?

(iii) Manmohan Reddy holds shares of XYZ Pvt. Ltd. in Demat Form. Advise

how he would get the right issue shares ?

(iv) Are debt instruments viz; debentures and commercial papers available for Demat

at the Depository ?

(1+1+1+2=5 marks)

(b) 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.

1/2024/CMSL/NS Contd. ........

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(c) Mohan purchased a 3 month call option for 100 shares in PQR Ltd. at a premium

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of ` 30 per share, with an exercise price of ` 550. He also purchased a 3 month

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e an exercise price of ` 500. Calculate the profit or loss that Mohan wouldglmake
put option for 100 shares of the same company at a premium of ` 10 per share

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with

a assuming that the market price falls to ` 400 at the end of 3 months.

(d) The IFSCA (Issuance and Listing of Securities) Regulations, 2021 allowed a company

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incorporated in a foreign jurisdiction to list its securities in India. In this context, state

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the type of listing and eligibility criterion.

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OR (Alternate question to Q. No. 2)

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2A. (i) Write short note on an investment advisor. Explain in brief the general obligations

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and responsibilities of investment advisors.

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(ii) What are the key differences between WPI and CPI ?

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(iii) The rising FED rate will certainly impact the fund flow to rest of the word. Elucidate

the statement in the Indian context.

(iv) 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.

PART–II

3. (a) 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.

1/2024/CMSL/NS Contd. ........

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(b) Sanaya Ltd. (a listed company) wants to implement Sweat Equity shares scheme for

m The company is also willing to issue shares under the scheme to one .c
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its employees.
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its ewhole-time a
director ‘Jeevan’. Jeevan holds 21% of the outstanding equitylshare
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laof the company. Whether the company can issue Sweat Equity shares toaJeevan ?
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What type of information to be disclosed to the stock exchange after issue of Sweat

Equity shares ?

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Neeraj, an experienced technocrat, .worked as an Executive director of an unlisted
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(c)

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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 :

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(i) Requirement of appointment of women director.

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(ii) Meeting & Quorum of the Board Meeting.

ag (iii) Composition of an Audit Committee.

(1+2+2=5 marks)

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4. (a) 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 ?

(b) 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 ?

(i) Raman is acting as a Company Secretary

(ii) Naina defaulted repayment of loans and declared as wilful defaulter as per

RBI guidelines

(iii) Mayank is holding 15% of total voting rights.

(iv) The trading of equity shares of the company suspended by the stock exchange.

(v) Minal acting as a Chief Financial Officer.

1/2024/CMSL/NS Contd. ........

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(c) The share price of a listed industrial paint manufacturing company is continuously falling

one month, due to rising price of the crude oil, which is the prime raw .c
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material

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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.

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5. (a)
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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

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business of Organic farming technology and is operational since last two years. Many

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private equity players have already invested in the company and planning to sell their

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holding during the IPO. Calculate, the maximum permissible

ag investor by both companies (assuming face value of ` 10 in each case).

1/2024/CMSL/NS P.T.O.

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(b) Nirav attained the age of 18 years recently. He understands the concept of compounded

return, thus started investing in a Systematic Investment Plan (SIP) from his monthly

pocket money for an amount of ` 5,000 per month at the beginning of every month.

The NAV of the scheme at the beginning of each month is given as below :

Month 1 : ` 10, Month 2 : ` 10.50, Month 3 : ` 10.80, Month 4 : ` 11.00,

Month 5 : ` 11.30

The NAV at the end of the 5th month is ` 12.10

What will be the value of holding of Nirav the end of 5th month under this SIP

plan ?

(c) 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.

1/2024/CMSL/NS Contd. ........

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Attempt all parts of either Q. No. 6 or Q. No. 6A

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(a) l Exotica venture capital fund (leading foreign fund house) had invested inaa startup
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6.

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

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period of pre-issue shareholding. What will be your answer, if the majority of the

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IPO proceeds is used for capital expenditure ?

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(b)
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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

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under the non-institutional category and how and when he gets more chances for

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shares allotment.

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The concept of ‘‘Green debt security’’ has been introducedlain SEBI regulations; narrate
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(c)

any five purposes for which money raised through green debt security can be utilized.

(5 marks each)

1/2024/CMSL/NS P.T.O.

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OR (Alternate question to Q. No. 6)

6A. Write short notes on the following :

(i) Composition of Risk Management Committee

(ii) Quarterly disclosures by a Collective Investment Management Company

(iii) Distinguish between Regular and Direct plan of a mutual fund scheme

(iv) Enterprise Value

(v) Fraud under SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to

Securities Market) Regulations, 2003.

(3 marks each)

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1/2024/CMSL/NS Contd. ........

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