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CS Executive · Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts

An acquirer fails to make a public announcement to acquire shares at a minimum price when the regulations require it. Which statement about the consequence under the SEBI Act is correct?

Under Section 15H the person is liable to a penalty of not less than ten lakh rupees, which may extend to twenty-five crore rupees or three times the profits made from the failure, whichever is higher. The other figures are incorrect.

  1. APenalty of not less than ten lakh rupees, extendable to twenty-five crore rupees or three times the profits made from the failure, whichever is higherCorrect
  2. BPenalty fixed at one lakh rupees only
  3. CPenalty of up to one crore rupees or twice the profits, whichever is lower
  4. DNo penalty; only the shares are frozen

Explanation

Section 15H covers failure to make a public announcement to acquire shares at a minimum price. The penalty is at least ten lakh rupees and may extend to twenty-five crore rupees or three times the profits made, whichever is higher. The other options misstate the amounts or the 'whichever' rule.

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