Skip to content

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

Under Section 15H of the SEBI Act, 1992, a person fails to pay consideration to shareholders who sold shares pursuant to a letter of offer. Which statement about the penalty is correct?

Failure to pay consideration to shareholders who sold under a letter of offer attracts a Section 15H penalty of at least ten lakh rupees, extending to twenty-five crore rupees or three times the profits made from the failure, whichever is higher.

  1. APenalty of not less than ten lakh rupees, extending to twenty-five crore rupees or three times the profits made out of the failure, whichever is higherCorrect
  2. BPenalty of not less than ten lakh rupees, extending to twenty-five crore rupees or three times the profits, whichever is lower
  3. CPenalty of up to one lakh rupees only
  4. DNo penalty, because payment default is outside Section 15H

Explanation

Clause (iv) of Section 15H covers failure to make payment of consideration to shareholders who sold shares pursuant to a letter of offer. The penalty is not less than ten lakh rupees but may extend to twenty-five crore rupees or three times the profits made from the failure, whichever is higher. The 'lower' option reverses the text, and the other two options misstate the coverage or the amount.

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