SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018
9 questions. Each answer is explained.
Question 1 of 9Practice · Series III-A — Securities Intermediaries Compliance (Non-Fund)
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Learn these topics
More units in NISM Series III-A
- Introduction to the Financial System8
- Regulatory Framework – General View14
- Introduction to Compliance6
- Securities and Exchange Board of India Act, 199211
- Securities Contracts (Regulation) Act, 1956 and Rules, 19576
- SEBI (Intermediaries) Regulations, 20089
- SEBI (Prohibition of Insider Trading) Regulations, 20159
- SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 20039
- Prevention of Money Laundering Act, 200211
- SEBI (KYC Registration Agency) Regulations, 20113
- SEBI (Foreign Portfolio Investors) Regulations, 20195
- SEBI (Stock Brokers) Regulations, 19929
- SEBI (Merchant Bankers) Regulations 1992, etc.9
- Depositories Act 19963
- SEBI (Depositories and Participants) Regulations 20184
- SEBI (Registrar to an Issue and Share Transfer Agents) Regulations, 19934
- SEBI (Research Analyst) Regulations, 20143
- SEBI (Investment Advisers) Regulations, 20133
- SEBI (Debenture Trustees) Regulations, 19934
- SEBI (Credit Rating Agencies) Regulations, 19994
- SEBI (Custodian) Regulations, 19964
- Proxy Advisors3
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series III-A Securities Intermediaries Compliance (Non-Fund)
Exam rules read on NISM's site on 17 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 17 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 9 questions on SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, with answers
Q1What distinguishes an initial public offer from a further public offer of equity shares?
Option A. The issuer must already have the relevant equity shares listed
Why it is wrong: A further public offer, rather than an initial public offer, involves an already listed issuer.
Option B. The issuer is unlisted before the relevant public offer — Correct answer
Option C. The offer must be restricted to its existing shareholders
Why it is wrong: A proportionate offer restricted to existing shareholders describes a rights issue.
Option D. The offer must consist solely of a fresh issue by the company
Why it is wrong: An initial public offer can include an eligible offer for sale and need not consist solely of fresh shares.
Answer: B. An initial public offer is a public offer by an unlisted issuer, unlike a further public offer by a listed issuer. Remember: Distinguish initial and further public offers by the issuer’s listing and offering context.
Hint, shown before you answer in practice mode: Common mistake: Assuming every new issue by a company is an IPO. Focus on the issuer’s listing status before the offer.
III-A-110easyconceptual
Q2Which issue offers new shares to existing shareholders in proportion to their current holdings?
Option A. An unrestricted public offer
Why it is wrong: An unrestricted public offer is not limited to existing shareholders in proportion to their holdings.
Option B. A private placement to selected investors
Why it is wrong: A private placement selects investors rather than creating a proportionate entitlement for existing shareholders.
Option C. An employee stock-option grant
Why it is wrong: An employee grant is based on employment and scheme terms, not proportionate share ownership.
Option D. A rights issue — Correct answer
Answer: D. A rights issue offers new shares to existing shareholders in proportion to their holdings. Remember: A rights issue creates a proportionate offer for existing shareholders.
Hint, shown before you answer in practice mode: Common mistake: Confusing an offer to existing shareholders with an unrestricted public offer. Consider whether eligibility comes from an existing shareholding.
III-A-111easyconceptual
Q3Under ASBA, what generally happens to the application amount before the amount payable for allotted securities is debited?
Option A. It is transferred immediately to the issuer before allotment
Why it is wrong: Under ASBA the funds remain blocked in the applicant’s account until the applicable debit.
Option B. It remains freely withdrawable throughout the allotment process
Why it is wrong: Blocking restricts the applicant from freely using the blocked amount.
Option C. It is debited in full even when no shares are allotted
Why it is wrong: A non-allottee does not owe the full application amount for shares not allotted.
Option D. It stays blocked in the applicant’s bank account — Correct answer
Answer: D. ASBA, or Application Supported by Blocked Amount, blocks the application funds in the applicant’s bank account. The applicable amount is debited for allotted securities. Remember: ASBA blocks funds rather than requiring an immediate unrestricted transfer of the full application amount.
Hint, shown before you answer in practice mode: Common mistake: Confusing a block on available funds with final payment for allotment. Distinguish reserving money from making the final payment.
III-A-112easyconceptual
Q4An issue collects investor bids within a price band to assess demand and determine the issue price. Which process is described?
Option A. A fixed-price public issue
Why it is wrong: A fixed-price issue does not discover its price through investor bids in a band.
Option B. A bonus issue to existing shareholders
Why it is wrong: A bonus issue does not collect subscription bids to discover an issue price.
Option C. Book building — Correct answer
Option D. A stock split of outstanding shares
Why it is wrong: A stock split divides existing shares rather than collecting price bids for an issue.
Answer: C. Book building uses investor bids and demand information in the issue-pricing process. Remember: Book building links issue pricing to the demand revealed through bids.
Hint, shown before you answer in practice mode: Common mistake: Treating the top of a price band as automatically the final issue price. Think about how bids contribute to discovering the offer price.
III-A-113mediumapplication
Q5A shareholder owns 600 shares. A rights issue offers one new share for every four held. What is the shareholder’s entitlement?
Option A. 100 shares
Why it is wrong: One hundred shares would use a one-for-six ratio.
Option B. 150 shares — Correct answer
Option C. 240 shares
Why it is wrong: Two hundred forty does not follow the stated one-for-four ratio.
Option D. 2,400 shares
Why it is wrong: Multiplying by four reverses the entitlement ratio.
Answer: B. The entitlement is 150 shares. Rights shares = 600 ÷ 4 × 1 = 150. The stated holding creates no fractional entitlement. Remember: Apply the new-shares-to-existing-shares ratio in the correct direction.
Hint, shown before you answer in practice mode: Common mistake: Multiplying existing holdings by the denominator of the rights ratio. Apply the entitlement ratio to the existing holding.
III-A-114mediumnumerical
Q6An investor holds 300 shares before a one-for-two bonus issue. Assuming no other changes, how many shares will the investor hold afterwards?
Option A. 150 shares
Why it is wrong: One hundred fifty is only the additional bonus allotment.
Option B. 600 shares
Why it is wrong: Six hundred incorrectly treats the issue as one-for-one.
Option C. 900 shares
Why it is wrong: Nine hundred reverses and misapplies the bonus ratio.
Option D. 450 shares — Correct answer
Answer: D. The investor will hold 450 shares. Bonus shares = 300 ÷ 2 = 150. Total holding = 300 + 150 = 450 shares. Remember: Post-bonus holdings include both the original and additional shares.
Hint, shown before you answer in practice mode: Common mistake: Reporting the bonus allotment as the total holding. Calculate the extra shares first, then add the original holding.
III-A-115mediumnumerical
Q7An offer contains a ₹60 crore fresh issue and a ₹40 crore shareholder offer for sale. Ignoring expenses, how much goes to the issuer?
Option A. ₹60 crore — Correct answer
Option B. ₹40 crore
Why it is wrong: ₹40 crore is the selling shareholders’ gross proceeds rather than the issuer’s.
Option C. ₹100 crore
Why it is wrong: ₹100 crore combines issuer proceeds with shareholder sale proceeds.
Option D. ₹20 crore
Why it is wrong: ₹20 crore incorrectly nets the two distinct components.
Answer: A. The issuer receives ₹60 crore from the fresh issue. The ₹40 crore offer-for-sale proceeds belong to the selling shareholders under the stated assumptions. Remember: An offer for sale does not itself raise fresh money for the issuer.
Hint, shown before you answer in practice mode: Common mistake: Treating the entire public-offer size as funds raised by the company. Separate newly issued capital from existing shares sold by shareholders.
III-A-116mediumnumerical
Q8A company issues 2 lakh new shares at ₹75 each with ₹10 face value. Ignoring expenses, what are the share-capital and securities-premium additions?
Option A. ₹150 lakh and ₹0
Why it is wrong: Crediting the full issue proceeds to share capital ignores the face-value distinction.
Option B. ₹130 lakh and ₹20 lakh
Why it is wrong: This reverses the face-value and premium components.
Option C. ₹20 lakh and ₹150 lakh
Why it is wrong: ₹150 lakh is the total proceeds rather than the premium component.
Option D. ₹20 lakh and ₹130 lakh — Correct answer
Answer: D. Share capital increases by ₹20 lakh and securities premium by ₹130 lakh. Share capital = 2 lakh × ₹10 = ₹20 lakh. Premium per share = ₹75 − ₹10 = ₹65. Securities premium = 2 lakh × ₹65 = ₹130 lakh. Remember: Separate the nominal value of issued shares from the issue premium.
Hint, shown before you answer in practice mode: Common mistake: Crediting the entire issue price to paid-up share capital. Split the issue price between face value and the excess over face value.
III-A-117hardnumerical
Q9Shares priced at ₹100 offer one-for-four rights at ₹80. Assuming full subscription and no other effects, what is the theoretical ex-rights price?
Option A. ₹90
Why it is wrong: ₹90 gives equal weight to old and new prices instead of the four-to-one ratio.
Option B. ₹95
Why it is wrong: ₹95 incorrectly spreads the subscription discount over four rather than five shares.
Option C. ₹120
Why it is wrong: ₹120 divides the combined value by the old share count rather than the enlarged count.
Option D. ₹96 — Correct answer
Answer: D. The theoretical ex-rights price is ₹96. Four old shares contribute ₹400 and one new share contributes ₹80. Combined value = ₹480 across five shares. Theoretical price = ₹480 ÷ 5 = ₹96, not a prediction of the actual market price. Remember: Theoretical ex-rights value uses the enlarged number of shares.
Hint, shown before you answer in practice mode: Common mistake: Treating a theoretical adjustment as a guaranteed future trading price. Combine the value of the old shares and new subscription money over the enlarged share count.
III-A-118hardnumerical
SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018: common questions
How many practice questions are there on SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018?
9 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 23 practice topics for NISM Series III-A, which has 150 questions in total.
Are these real NISM Series III-A questions on SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018?
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.
Does negative marking apply to NISM Series III-A?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. 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.
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