Skip to content

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

Kaveri Industries Ltd, a listed company, is the target of a bidder who has to make a public announcement to acquire shares at a minimum price but fails to do so. Under Section 15H of the SEBI Act, 1992, what is the consequence for the bidder?

Under Section 15H the bidder 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 penalty is a range with a floor, not a fixed sum.

  1. ALiable to a penalty 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. BLiable to a penalty fixed at exactly ten lakh rupees irrespective of profits made
  3. CLiable to a penalty of up to twenty-five crore rupees or three times the profits, whichever is lower, with no minimum amount
  4. DLiable only to a direction to disclose, with no monetary penalty unless shares are actually acquired

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 from the failure, whichever is higher. The option using 'whichever is lower' reverses the rule, and the fixed-amount option ignores the range.

Did you get it right without looking?

One question tells you little. A timed set on Acquisition of Shares and Takeovers - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Acquisition of Shares and Takeovers - ConceptsFree diagnostic mock

More Acquisition of Shares and Takeovers - Concepts questions