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

Meridian Textiles Ltd is listed on a recognised stock exchange. An investor group wants to buy a large block of its equity shares and also obtain control over the company. Under the SEBI Act, 1992, which section prohibits any person from acquiring control of a listed company, or securities above the prescribed percentage of its equity share capital, in contravention of SEBI regulations?

Section 12A of the SEBI Act, 1992 contains the prohibition, in clause (f), on acquiring control of a listed company or securities above the prescribed percentage of equity share capital in contravention of SEBI regulations. Section 12 concerns intermediary registration and Section 15H concerns penalty.

  1. ASection 12ACorrect
  2. BSection 12
  3. CSection 22
  4. DSection 15H

Explanation

Section 12A(f) bars any person, directly or indirectly, from acquiring control of a listed or proposed-to-be-listed company, or securities above the prescribed percentage of equity share capital, in contravention of SEBI regulations. Section 12 deals with registration of intermediaries, so it is not the takeover prohibition. Section 15H only prescribes the penalty for non-disclosure, and Section 22 treats SEBI officers as public servants.

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