Processes related to Public Offering of Shares
10 questions. Each answer is explained.
Question 1 of 10Practice · Series II-A — Registrars to an Issue and Share Transfer Agents - Corporate
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Learn these topics
More units in NISM Series II-A
- Introduction to Securities10
- Characteristics of Equity Shares10
- Characteristics of Debt Securities10
- Characteristics of Other Securities10
- Basics of Mutual Funds10
- SEBI – Role and Regulations10
- Public Offer of Securities10
- Modes of allotment of shares other than Public Offers10
- Roles and Responsibilities in a Public Issue10
- Depository Services10
- Processes Related to Depositories10
- Investor Interface with the R&T Agent10
- Secondary Market Transactions10
- Client Servicing10
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 of 100 marks |
| Negative marking | None · a wrong answer costs nothing beyond the mark |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 8 of 100 marks (8%) |
Source: March 2025 Annexure I, Unit 9: Processes related to Public Offering of shares
NISM Series II-A Registrars to an Issue and Share Transfer Agents - Corporate
Exam rules read on NISM's site on 31 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 31 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 10 questions on Processes related to Public Offering of Shares, with answers
Q1What is a central purpose of a prospectus in a public offer of shares?
Option A. Guaranteeing a profitable listing-day sale
Why it is wrong: Disclosure does not guarantee a profitable listing-day price.
Option B. Disclosing information needed to evaluate the offer — Correct answer
Option C. Providing a personal trading account to every reader
Why it is wrong: A prospectus is an offer document, not a trading account.
Option D. Replacing all future listed-company disclosures
Why it is wrong: An offer document does not replace later continuing disclosure obligations.
Answer: B. A prospectus discloses information about the issuer, offer and risks to help investors evaluate the offer. Remember: Read offer disclosures to understand the issue rather than treating them as a return promise.
Hint, shown before you answer in practice mode: Consider how an investor learns about the issuer, offer terms and risks. Common mistake: Assuming publication of a prospectus certifies investment quality.
II-A-081easyconceptual
Q2Which detail may be incomplete in a red herring prospectus before a book-built offer is priced?
Option A. The identity of the issuing company
Why it is wrong: The issuer’s identity is not omitted merely because the document is a red herring prospectus.
Option B. The description of the issuer’s business
Why it is wrong: Business disclosure remains important and is not replaced by the price-discovery process.
Option C. The fact that shares are being offered
Why it is wrong: The document still identifies the securities offer.
Option D. The final offer price — Correct answer
Answer: D. The final offer price may be incomplete in a red herring prospectus because price discovery has not yet been completed. Remember: A red herring prospectus precedes final pricing but still contains important disclosures.
Hint, shown before you answer in practice mode: The final outcome of price discovery is not known at the beginning of book building. Common mistake: Assuming a red herring prospectus contains no useful issuer information.
II-A-082easyconceptual
Q3What is the defining price feature of a fixed-price share issue?
Option A. The offer price is stated before subscriptions are invited — Correct answer
Option B. The final price is always equal to face value
Why it is wrong: The stated issue price can differ from face value.
Option C. Each investor chooses an unrelated final allotment price
Why it is wrong: A fixed-price issue does not let every investor select a different allotment price.
Option D. The exchange changes the subscription price after each trade
Why it is wrong: Secondary-market trades do not continually reset its stated subscription price.
Answer: A. A fixed-price issue states the offer price before investors subscribe rather than discovering the final price through book building. Remember: Fixed price describes how the issue price is set, not whether a premium exists.
Hint, shown before you answer in practice mode: Distinguish a pre-stated subscription price from a price discovered through bids. Common mistake: Assuming a fixed-price issue must be issued at face value.
II-A-083easyconceptual
Q4An eligible investor bids at cut-off in a book-built offer. The issue price is finalised within the price band. What price has the investor agreed to accept?
Option A. Only the lowest price in the band
Why it is wrong: A cut-off bid does not insist on the bottom of the price band.
Option B. The final discovered issue price — Correct answer
Option C. Only the share’s nominal face value
Why it is wrong: Face value is not the same as the discovered issue price.
Option D. Any future exchange price after listing
Why it is wrong: A cut-off bid relates to issue pricing, not every future exchange price.
Answer: B. The investor agrees to the final discovered issue price within the applicable offer terms by placing an eligible cut-off bid. Remember: A cut-off bid accepts the discovered offer price rather than naming a specific bid price.
Hint, shown before you answer in practice mode: A cut-off bid leaves the offer’s final price discovery to the process. Common mistake: Treating cut-off as a request for the lowest possible price.
II-A-084mediumapplication
Q5An underwriter covers 1,00,000 shares and valid public subscriptions cover 72,000. Assuming it bears the whole shortfall, what must it subscribe?
Option A. 1,00,000 shares
Why it is wrong: 1,00,000 shares ignores the amount already covered by valid public subscriptions.
Option B. 72,000 shares
Why it is wrong: 72,000 shares is the public subscription, not the shortfall.
Option C. 1,72,000 shares
Why it is wrong: 1,72,000 shares adds quantities instead of finding the uncovered balance.
Option D. 28,000 shares — Correct answer
Answer: D. The underwriter must subscribe for 28,000 shares under the stated agreement. Shortfall = 1,00,000 − 72,000 = 28,000 shares. Remember: Underwriting liability depends on the agreement and the uncovered subscription.
Hint, shown before you answer in practice mode: Calculate the uncovered part of the quantity underwritten. Common mistake: Treating the entire issue size as the final underwriting subscription.
II-A-085mediumnumerical
Q6What is the broad purpose of a green shoe option associated with a public offer?
Option A. Covering the original issue’s subscription shortfall
Why it is wrong: Covering an agreed subscription shortfall is the core underwriting function rather than the green shoe distinction.
Option B. Maintaining the issuer’s shareholder register after allotment
Why it is wrong: Maintaining shareholder records is an RTA function rather than the stabilisation mechanism.
Option C. Supporting permitted post-listing price stabilisation — Correct answer
Option D. Determining the vesting conditions for employee options
Why it is wrong: Employee-option vesting is unrelated to a public offer’s green shoe arrangement.
Answer: C. A green shoe option supports price stabilisation after listing through the permitted over-allotment and stabilisation arrangement. Remember: Price stabilisation is a regulated mechanism, not a guaranteed market floor.
Hint, shown before you answer in practice mode: Think about the management of price pressure around listing, not a promised return. Common mistake: Assuming a green shoe option eliminates post-listing price risk.
II-A-086mediumconceptual
Q7An investor bids ₹96 per share in a book-built issue. The final issue price is ₹99. With no applicable concession, is this bid price sufficient?
Option A. Yes, because every bid within the band must receive shares
Why it is wrong: A bid within the band can still be below the final price.
Option B. Yes, because the investor can choose the lower allotment price
Why it is wrong: The applicant cannot require allotment at a lower personal price.
Option C. No, because every bid above face value is invalid
Why it is wrong: A bid is not invalid merely because it exceeds face value.
Option D. No, it is below the final issue price — Correct answer
Answer: D. No, the ₹96 bid price is insufficient because it is below the ₹99 issue price and no relevant concession applies. Remember: A specified-price bid must satisfy the final price requirement to remain eligible for allotment.
Hint, shown before you answer in practice mode: Compare the investor’s maximum stated price with the final offer price. Common mistake: Confusing acceptance into the bid book with eligibility at the final price.
II-A-087mediumapplication
Q8When several RTAs handle one issue, what should the issuer agreement clearly specify for each RTA?
Option A. Its right to discard records after issue closure
Why it is wrong: Issue closure does not remove record-retention duties.
Option B. Its scope of work and responsibilities — Correct answer
Option C. Its promised listing-day return to applicants
Why it is wrong: The agreement cannot promise market returns to applicants.
Option D. Its power to ignore the other intermediaries
Why it is wrong: Multiple intermediaries still need coordination and compliance.
Answer: B. The agreement should clearly specify each RTA’s scope and responsibilities so accountability is defined when more than one registrar is engaged. Remember: Define responsibilities explicitly when an issue uses more than one registrar.
Hint, shown before you answer in practice mode: Shared work needs clear accountability rather than overlapping assumptions. Common mistake: Assuming another registrar is responsible for any task not clearly assigned.
II-A-088mediumregulatory
Q9For 1,000 shares, bids are 400 at ₹100, 400 at ₹98 and 500 at ₹96. What is the highest price attracting demand for at least 1,000 shares?
Option A. ₹96 — Correct answer
Option B. ₹98
Why it is wrong: ₹98 attracts only 800 shares at or above that price.
Option C. ₹100
Why it is wrong: ₹100 attracts only 400 shares.
Option D. ₹97
Why it is wrong: ₹97 still excludes the ₹96 bids and therefore attracts only 800 shares.
Answer: A. The highest qualifying price is ₹96. Demand at ₹100 is 400 shares. At ₹98 it is 400 + 400 = 800. At ₹96 it is 400 + 400 + 500 = 1,300, which covers 1,000 shares. Remember: Price discovery uses cumulative demand at or above a tested price.
Hint, shown before you answer in practice mode: At each tested price, include bids willing to pay that price or more. Common mistake: Comparing each bid group alone instead of building cumulative demand.
II-A-089hardnumerical
Q10An issue of 10 lakh shares receives 7 lakh valid subscriptions. Two underwriters share the whole shortfall 60:40, with no adjustments. What is the first underwriter’s liability?
Option A. 1.2 lakh shares
Why it is wrong: 1.2 lakh shares is the second underwriter’s 40% share of the shortfall.
Option B. 6 lakh shares
Why it is wrong: 6 lakh shares applies 60% to the whole issue rather than to the shortfall.
Option C. 3 lakh shares
Why it is wrong: 3 lakh shares assigns the whole shortfall to the first underwriter.
Option D. 1.8 lakh shares — Correct answer
Answer: D. The first underwriter’s liability is 1.8 lakh shares. Shortfall = 10 lakh − 7 lakh = 3 lakh. First underwriter’s share = 3 lakh × 60% = 1.8 lakh shares. Remember: Apply agreed underwriting proportions to the correct uncovered quantity.
Hint, shown before you answer in practice mode: Work out the uncovered issue quantity before applying the first underwriter’s share. Common mistake: Allocating the gross issue size instead of the final shortfall.
II-A-090hardnumerical
Processes related to Public Offering of Shares: common questions
How many practice questions are there on Processes related to Public Offering of Shares?
10 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 15 practice topics for NISM Series II-A, which has 150 questions in total.
Are these real NISM Series II-A questions on Processes related to Public Offering of Shares?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How much of the NISM Series II-A exam is Processes related to Public Offering of Shares?
NISM's published syllabus outline gives it 8 of the paper's 100 marks, or 8% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 9: Processes related to Public Offering of shares
Does negative marking apply to NISM Series II-A?
No. NISM applies no negative marking to Series II-A. A wrong answer costs nothing beyond the mark you did not earn, so a blank is never better than an attempt. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Roles and Responsibilities in a Public Issue
10 questions on Roles and Responsibilities in a Public Issue. Its quiz opens on that unit.
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