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

In a buyback through the tender offer route, a client holds shares in demat form and wishes to tender them. Which statement is correct regarding the procedure for such shares?

In a tender offer buyback, the client bids through a stock broker on the exchange mechanism, and the demat shares are blocked or transferred to the clearing corporation's designated account until settlement. Accepted shares are extinguished and the unaccepted shares are returned, so no rematerialisation is needed.

  1. AShares are tendered through the stock exchange mechanism, and the tendered shares are blocked or transferred to the clearing corporation's designated account until settlementCorrect
  2. BShares must be rematerialised before tendering
  3. CThe client must transfer shares to the company's own demat account before the offer opens
  4. DDemat shares cannot be tendered in a buyback

Explanation

In the exchange-based tender offer, the client places a bid through a broker and the shares are blocked or moved to the clearing corporation's account for settlement. Accepted shares are extinguished; unaccepted ones are returned. Rematerialisation or a transfer to the company's account is not required.

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