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

Mr. Nair holds shares of a company in his demat account that is the subject of a buyback through the tender offer route. What must he do to participate?

Mr. Nair must tender his shares through his stockbroker on the exchange platform, provided he was a shareholder on the record date. The shares are then blocked or transferred for settlement, since neither the depository nor the company debits accounts automatically.

  1. ATender his shares through his broker using the exchange mechanism, with shares blocked or transferred as per the process, if he was a shareholder on the record dateCorrect
  2. BApply directly to the depository with a physical form
  3. CWait for the company to automatically debit his demat account
  4. DSell the shares in the open market to the company on any date

Explanation

In a tender offer buyback, eligible shareholders as on the record date tender shares via their brokers on the exchange mechanism, and the shares are blocked or moved for settlement. The company does not debit accounts automatically, and the depository does not accept direct applications.

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