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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, Mr. Shah holds 600 shares in demat form and the entitlement ratio for his category is 2 shares for every 15 held. He tenders his full entitlement and 40 additional shares. Under the process, what is his buyback entitlement in number of shares?

His buyback entitlement is 80 shares, calculated as 600 multiplied by 2 and divided by 15. Extra shares he tenders beyond this are accepted only if entitlements of other holders remain unutilised, so they do not increase the entitlement itself.

  1. A80 sharesCorrect
  2. B40 shares
  3. C120 shares
  4. D600 shares

Explanation

Entitlement = 600 x 2/15 = 80 shares. Additional shares tendered (40) are accepted only if other shareholders do not use their entitlements, and they do not change the entitlement itself. So entitlement is 80, not 120 (80 + 40) or 600.

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