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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions

In a buyback offer made through the tender offer route, a shareholder holding demat shares who wishes to participate normally has to do what?

A shareholder wishing to join a tender-offer buyback tenders shares through a broker on the exchange mechanism. The shares are blocked or delivered through the clearing process, accepted shares are bought back, and shares not accepted are returned or released to the demat account.

  1. ATender the shares through his broker; the shares are blocked or transferred for the offer in the clearing process, and unaccepted shares are returnedCorrect
  2. BSend physical share certificates by post to the DP
  3. CClose his demat account first
  4. DTransfer all shares permanently to the issuer before the offer opens

Explanation

In an exchange-mechanism tender offer, the shareholder places a bid via a broker, and shares are delivered or blocked as per the clearing corporation's process. Accepted shares are bought back and extinguished, while unaccepted shares are returned or unblocked. Closing the account or transferring permanently beforehand is not required.

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