CS Executive Capital Market & Securities Laws flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Primary market

Segment where securities are issued for the first time by companies or governments to raise capital, including IPOs, FPOs, rights issues, and preferential allotments.

Qualified Institutional Buyer

Institution such as a mutual fund, bank, insurer, FPI, or provident fund eligible to participate in the QIB portion of a public issue under SEBI ICDR.

Book building

Price discovery method where investors bid within a price band and the issuer and merchant banker determine the cut-off price based on demand.

Anchor investor

QIB allotted up to 60% of the QIB portion in a book-built IPO, with a minimum application of Rs 10 crore and lock-in on shares.

Rights issue

Offer of new shares to existing shareholders in proportion to their holding, usually at a discount, with rights to renounce the entitlement.

T+1 settlement

Settlement cycle where trade obligations are discharged on the next working day, with pay-in and pay-out completed on that day.

Clearing corporation

Entity that novates trades, acts as central counterparty, collects margins, and guarantees settlement through a settlement guarantee fund.

Circuit breaker

Market-wide trading halt triggered at 10%, 15%, or 20% movement in the benchmark index to curb excessive volatility.

Merchant banker Category I

Intermediary permitted to manage public issues, underwriting, and portfolio management; requires minimum net worth of Rs 5 crore.

Portfolio manager

SEBI-registered intermediary managing client portfolios, with minimum client investment of Rs 50 lakh and net worth requirements.

Investment adviser

SEBI-registered person providing investment advice for consideration, subject to fiduciary duty, risk profiling, and net worth norms.

SCRA Section 2(h)

Provision defining 'securities' to include shares, bonds, debentures, derivatives, CIS units, and Government securities.

SCRA Section 13

Declares contracts in notified securities void unless made through a recognised stock exchange or in accordance with its rules.

Demutualisation

Process under SCRA Section 4B separating ownership, trading rights, and management of a stock exchange.

SEBI Section 11

Provision listing SEBI's functions: regulating markets, protecting investors, promoting development, and registering intermediaries.

SEBI Section 15A

Penalty provision for failure to furnish information, return, or report, with quantum determined by the adjudicating officer.

Securities Appellate Tribunal

Statutory body hearing appeals against SEBI orders within 45 days, with further appeal to the Supreme Court on questions of law.

Depository participant

SEBI-registered agent of a depository that opens demat accounts, processes dematerialisation requests, and maintains client records.

Dematerialisation

Conversion of physical share certificates into electronic form held in a demat account through a depository participant and registrar.

Rematerialisation

Process of converting electronic holdings in a demat account back into physical share certificates upon client request.

Unpublished price-sensitive information

Material information not generally available that could affect security prices, including financial results, dividends, and mergers.

Trading window closure

Period when designated persons cannot trade in company securities, typically around financial results and price-sensitive events.

SEBI SCORES

Online grievance redressal platform where investors lodge complaints against listed companies and intermediaries, tracked by registration number.

Informant mechanism

SEBI reward programme for whistleblowers providing information on insider trading, with rewards up to 10% of disgorgement capped at Rs 1 crore.

SAST initial trigger

Acquisition of 25% or more voting rights in a target company, requiring a mandatory open offer for at least 26% of shares.

Creeping acquisition

Permitted annual acquisition of up to 5% voting rights per financial year by a holder already above the 25% threshold.

Buy-back of securities

Company purchase of its own shares through tender offer, open market, or odd-lot method, subject to capital and reserve limits.

Reverse book building

Delisting price discovery mechanism where shareholders bid exit prices and the discovered price determines the exit offer.

Net asset value

Value per mutual fund unit calculated as total assets minus liabilities, divided by the number of units outstanding.

Collective investment scheme

Pooled investment arrangement requiring SEBI registration, with minimum net worth of Rs 1 crore for the collective investment management company.

Alternative Investment Fund

Privately pooled investment vehicle registered under SEBI AIF Regulations 2012, categorised as I, II, or III with minimum investor commitment of Rs 1 crore.

Total expense ratio

Percentage of scheme assets charged as annual expenses, subject to SEBI limits based on AUM slabs and plan type.