Issues of shares, bonus issues, sweat equity shares, employee stock option scheme, employee stock purchase scheme, buy back of shares, redemption of preference shares, issue and redemption of debentures, underwriting of securities - One Line Questions

1. What is the maximum limit for buy-back of shares as a percentage of total paid-up share capital and free reserves? — 25%
2. What is the minimum subscription that a company must receive before it can proceed with the allotment of shares? — 90% of the issue size
3. What is a 'convertible debenture'? — A debenture that can be converted into equity shares at the option of the holder or the company
4. What is a 'letter of offer' in the context of buy-back of shares? — A document sent to existing shareholders detailing the terms of the buy-back offer
5. In an Employee Stock Purchase Scheme (ESPS), employees are typically allowed to buy shares at: — The prevailing market price or a slight discount to it
6. What is a Debenture Redemption Reserve (DRR)? — A reserve created for meeting the redemption of debentures
7. What is a debenture? — A loan certificate issued by a company
8. What is a 'firm allotment' in the context of underwriting? — Allotment of shares to the underwriter as a part of their agreement
9. The purpose of 'vesting period' in ESOS is to: — Ensure employees remain with the company for a specified duration before exercising options
10. An underwriter agrees to purchase any shares or debentures that are not subscribed by the public for a commission, which is known as: — Underwriting commission
11. When preference shares are redeemed out of the proceeds of a fresh issue of shares, the amount received from the fresh issue is credited to: — Share Capital Account
12. The premium on redemption of preference shares, if any, must be provided for out of: — Securities Premium Account or Profits
13. If a company fails to redeem its preference shares within the stipulated period, the preference shareholders become: — Ordinary shareholders with voting rights
14. When debentures are issued at a premium, the premium amount is credited to: — Securities Premium Account
15. Which of the following is a key characteristic of Employee Stock Option Scheme (ESOS)? — Employees are granted the right, but not the obligation, to buy shares at a predetermined price
16. What is the primary difference between ESOS and Employee Stock Purchase Scheme (ESPS)? — ESOS involves a predetermined price, while ESPS allows purchase at market price.
17. For the redemption of preference shares, a company must create a reserve known as: — Capital Redemption Reserve (CRR)
18. Underwriting is a contract of: — Guarantee
19. Which of the following is a consequence of a company buying back its own shares? — Increase in earnings per share (EPS)
20. When a company buys back its own shares, what is the impact on its equity share capital? — Decreases
21. Redemption of preference shares means: — Paying back the capital invested by preference shareholders
22. What is 'stags' in the context of share issuance? — Speculators who apply for shares with the intention of selling them quickly at a profit
23. Which of the following is NOT a method of debenture redemption? — Issuing new equity shares at par to redeem debentures
24. Under ESOS, the predetermined price at which employees can buy shares is known as: — Exercise price or Grant price
25. Sweat equity shares are issued for what kind of contribution? — Intellectual property rights or value addition
26. Debentures can be secured or unsecured. Secured debentures are: — Backed by a charge on the company's assets
27. If an underwriter buys shares that the public does not subscribe to, this is called: — Undersubscription
28. Under the Companies Act, 2013, the creation of DRR is mandatory for the redemption of redeemable debentures, except for: — Private companies
29. Which of the following is a valid source for buy-back of shares according to the Companies Act, 2013? — Free reserves and securities premium account
30. When debentures are redeemed out of profits, the amount used for redemption is transferred from: — Profit and Loss Appropriation Account to Debenture Redemption Reserve
31. Preference shares can be redeemed out of: — Both (a) and (b)
32. When a company issues bonus shares, what is the effect on its reserves? — Reserves decrease
33. Bonus shares can be issued out of which of the following sources? — Profit and loss account and securities premium account
34. Which section of the Companies Act, 2013 deals with the issue of bonus shares? — Section 63
35. Which section of the Companies Act, 2013 governs the redemption of preference shares? — Section 55
36. Which of the following is a reserve that can be used for the redemption of preference shares? — Securities Premium Account
37. When a company issues shares at a price higher than their face value, the excess amount is credited to which account? — Securities Premium Account
38. When a company issues shares at a discount, the discount allowed is debited to: — Discount on Issue of Shares Account
39. What are sweat equity shares? — Shares issued to employees or directors at a discount or for consideration other than cash
40. A buy-back of shares can be done through: — Both (a) and (b)
41. When a company redeems its preference shares by issuing new equity shares, the Share Capital Account is credited with: — The face value of new equity shares issued
42. What is underwriting of securities? — The process of a third party guaranteeing to buy unsubscribed shares
43. The commission paid to an underwriter is usually calculated as a percentage of: — The face value of the shares underwritten
44. What is the purpose of the 'minimum subscription' clause in a prospectus? — To protect investors by ensuring the company does not proceed without adequate funding
45. What is the primary purpose of issuing shares? — To raise capital for the company
46. What is the main objective of an Employee Stock Option Scheme (ESOS)? — To align employees' interests with those of the shareholders and retain talent
47. What is the primary obligation of an underwriter in a 'full underwriting' contract? — To subscribe to any shares not taken up by the public
48. The Companies Act, 2013 permits the issue of shares at a discount only in specific circumstances, such as: — To holders of existing shares in a specific class (sweat equity)
49. Debentures are typically issued with: — A fixed rate of interest
All One Line Questions
E-Book Issues of shares, bonus issues, sweat equity shares, employee stock option scheme, employee stock purchase scheme, buy back of shares, redemption of preference shares, issue and redemption of debentures, underwriting of securities Online Test Issues of shares, bonus issues, sweat equity shares, employee stock option scheme, employee stock purchase scheme, buy back of shares, redemption of preference shares, issue and redemption of debentures, underwriting of securities Question Bank Issues of shares, bonus issues, sweat equity shares, employee stock option scheme, employee stock purchase scheme, buy back of shares, redemption of preference shares, issue and redemption of debentures, underwriting of securities