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Series II-A · Practice Set 1

NISM Series II-A: Registrars and Transfer Agents - Corporate Certification — Practice Set 1 Practice Questions

Original practice set for NISM Series II-A: Registrars and Transfer Agents - Corporate Certification. Every question below shows the correct answer and a full explanation, so you can read through this set as a study page or attempt it as a timed mock test.

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Practice questions

All 35 questions in Practice Set 1

Read each question, think through your answer, then expand it to check the correct option and explanation.

Capital Markets

Q1. A Registrar to an Issue (RTI) is appointed by:

  1. A. SEBI directly
  2. B. The company making a public issue to manage applications and allotments
  3. C. Stock exchanges
  4. D. Mutual fund trustees
Show correct answer & explanation

Correct answer: B. The company making a public issue to manage applications and allotments

A Registrar to an Issue (RTI) is appointed by the issuer company to manage the entire process of a public issue — receiving applications, processing them, assisting in allotment, and issuing refunds.
Capital Markets

Q2. Share Transfer Agents (STAs) handle:

  1. A. Trading of shares on exchanges
  2. B. Transfer of shares from one owner to another, maintaining shareholder records
  3. C. Setting share prices
  4. D. Regulating insider trading
Show correct answer & explanation

Correct answer: B. Transfer of shares from one owner to another, maintaining shareholder records

Share Transfer Agents (STAs) maintain records of shareholders, process transfer requests, handle transmission of shares, and manage other shareholder services on behalf of companies.
Capital Markets

Q3. SEBI regulates Registrars and Share Transfer Agents under:

  1. A. SEBI (Brokers) Regulations
  2. B. SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
  3. C. Companies Act, 2013
  4. D. RBI guidelines
Show correct answer & explanation

Correct answer: B. SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993

RTAs are regulated by SEBI under the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993. They must be registered with SEBI to operate.
IPO Process

Q4. IPO stands for:

  1. A. International Public Offering
  2. B. Initial Public Offering
  3. C. Internal Private Offering
  4. D. Inter-bank Payment Order
Show correct answer & explanation

Correct answer: B. Initial Public Offering

IPO stands for Initial Public Offering — when a company offers its shares to the public for the first time to raise capital and get listed on stock exchanges.
IPO Process

Q5. ASBA in the IPO process stands for:

  1. A. Application Supported by Blocked Account — funds blocked in investor's bank till allotment
  2. B. Application System Based Allocation
  3. C. Automatic Share Bidding Application
  4. D. Annual Subscription Based Allotment
Show correct answer & explanation

Correct answer: A. Application Supported by Blocked Account — funds blocked in investor's bank till allotment

ASBA (Application Supported by Blocked Amount) is the primary IPO application mechanism. The application money is blocked in the investor's bank account and debited only on allotment, with unblocked amounts freed for non-allotted applicants.
IPO Process

Q6. The Red Herring Prospectus (RHP) in an IPO contains:

  1. A. Final issue price only
  2. B. All IPO details except final issue price and number of shares
  3. C. Audited financial results for last 10 years
  4. D. Only risk factors of the company
Show correct answer & explanation

Correct answer: B. All IPO details except final issue price and number of shares

The Red Herring Prospectus (RHP) contains all material information about the IPO including company details, financials, risk factors, and use of proceeds — but excludes the final issue price and size which are added in the final prospectus.
IPO Process

Q7. Book Building in an IPO means:

  1. A. Printing physical share certificates
  2. B. A price discovery mechanism where investors bid within a price band
  3. C. Fixed price offering by company
  4. D. Distributing shares at par value only
Show correct answer & explanation

Correct answer: B. A price discovery mechanism where investors bid within a price band

Book Building is a price discovery mechanism where the issuer sets a price band and institutional and retail investors submit bids within this range. The final issue price is determined based on investor demand at various price levels.
IPO Process

Q8. The cut-off price in a book-built IPO is:

  1. A. The lowest price in the price band
  2. B. The highest price in the price band
  3. C. The price at which the issue is subscribed in full — determined post book building
  4. D. The price set by SEBI
Show correct answer & explanation

Correct answer: C. The price at which the issue is subscribed in full — determined post book building

The cut-off price is the final issue price determined after the book-building process, at which the IPO is subscribed. Retail investors who bid at cut-off price are allotted shares regardless of the final price within the band.
Share Transfer

Q9. Dematerialisation of shares means:

  1. A. Converting physical share certificates into digital/electronic form
  2. B. Destroying old share certificates
  3. C. Transferring shares to a different country
  4. D. Splitting shares into smaller denomination
Show correct answer & explanation

Correct answer: A. Converting physical share certificates into digital/electronic form

Dematerialisation (Demat) is the process of converting physical share certificates into electronic form, held in a Demat account with a Depository Participant (DP). It eliminates risks of loss, theft, and forgery of physical certificates.
Share Transfer

Q10. NSDL and CDSL are:

  1. A. Two major stock exchanges in India
  2. B. The two depositories that hold securities in dematerialised form
  3. C. Two credit rating agencies
  4. D. RBI-regulated payment banks
Show correct answer & explanation

Correct answer: B. The two depositories that hold securities in dematerialised form

NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) are the two SEBI-registered depositories in India that hold securities in dematerialised (electronic) form.
Share Transfer

Q11. Transmission of shares refers to:

  1. A. Selling shares on the stock exchange
  2. B. Transfer of shares due to operation of law — death, insolvency, or inheritance
  3. C. Transfer of shares as a gift
  4. D. Electronic transfer between Demat accounts
Show correct answer & explanation

Correct answer: B. Transfer of shares due to operation of law — death, insolvency, or inheritance

Transmission is the transfer of shares by operation of law — occurring due to death of the shareholder, insolvency, lunacy, or by way of inheritance. It differs from transfer, which is a voluntary act between buyer and seller.
Corporate Actions

Q12. A stock split (sub-division of shares) means:

  1. A. Reducing the number of shares outstanding
  2. B. Increasing number of shares outstanding by reducing face value proportionally
  3. C. Buying back shares from market
  4. D. Issuing bonus shares to promoters only
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Correct answer: B. Increasing number of shares outstanding by reducing face value proportionally

A stock split increases the number of outstanding shares by reducing the face value proportionally. For example, a 1:2 split converts 1 share of Rs. 10 face value into 2 shares of Rs. 5 face value. Market cap remains the same.
Corporate Actions

Q13. A rights issue allows existing shareholders to:

  1. A. Receive bonus shares free of cost
  2. B. Subscribe to new shares in proportion to their existing holdings at a discounted price
  3. C. Sell existing shares at a premium
  4. D. Convert debt to equity
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Correct answer: B. Subscribe to new shares in proportion to their existing holdings at a discounted price

A rights issue gives existing shareholders the right (but not obligation) to subscribe to additional new shares in proportion to their existing holdings (e.g., 1:5 ratio) at a price typically below the market price.
Corporate Actions

Q14. Bonus shares are issued by a company:

  1. A. By charging shareholders
  2. B. Free of cost to existing shareholders from company's reserves
  3. C. Only to promoters
  4. D. In exchange for convertible debentures
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Correct answer: B. Free of cost to existing shareholders from company's reserves

Bonus shares are issued free of cost to existing shareholders out of the company's accumulated reserves (retained earnings) in proportion to their existing holdings. They increase paid-up share capital without additional cash inflow.
Corporate Actions

Q15. Record date in the context of corporate actions is:

  1. A. Date when shares are listed on exchange
  2. B. The date on which the company checks its shareholder records to determine eligibility for dividend, bonus, or rights
  3. C. Date of AGM
  4. D. Date of dividend payment
Show correct answer & explanation

Correct answer: B. The date on which the company checks its shareholder records to determine eligibility for dividend, bonus, or rights

Record date is the specific date on which the company checks its register of shareholders to determine who is entitled to receive dividends, bonus shares, rights entitlements, or other corporate benefits.
Corporate Actions

Q16. Ex-dividend date is:

  1. A. The date dividend is paid
  2. B. The date before which you must own shares to receive the dividend — shares bought on/after this date do not get dividend
  3. C. The date the company announces dividend
  4. D. The date of AGM approval of dividend
Show correct answer & explanation

Correct answer: B. The date before which you must own shares to receive the dividend — shares bought on/after this date do not get dividend

The ex-dividend date is the cut-off date. Investors who purchase shares on or after the ex-dividend date are not entitled to receive the declared dividend. The share price typically drops by approximately the dividend amount on this date.
Regulatory Framework

Q17. The Companies Act, 2013 requires companies to transfer unpaid dividends after how many years to IEPF?

  1. A. 3 years
  2. B. 5 years
  3. C. 7 years
  4. D. 10 years
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Correct answer: C. 7 years

Under the Companies Act, 2013, any dividend that remains unpaid or unclaimed for 7 years must be transferred to the Investor Education and Protection Fund (IEPF) maintained by the central government.
IPO Process

Q18. QIBs in the IPO context refers to:

  1. A. Quick Investment Brokers
  2. B. Qualified Institutional Buyers — includes mutual funds, banks, FIIs, insurance companies
  3. C. Quarterly Investment Benchmarks
  4. D. Quality Issue Benchmarks
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Correct answer: B. Qualified Institutional Buyers — includes mutual funds, banks, FIIs, insurance companies

Qualified Institutional Buyers (QIBs) are large institutional investors like mutual funds, banks, FIIs/FPIs, insurance companies, and venture capital funds. In a book-built IPO, 75% of the issue is typically reserved for QIBs.
IPO Process

Q19. In a book-built IPO, what percentage is reserved for retail individual investors (RIIs)?

  1. A. 10%
  2. B. 15%
  3. C. 35%
  4. D. 50%
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Correct answer: C. 35%

In a standard book-built IPO: 75% is reserved for QIBs, 15% for Non-Institutional Investors (NIIs/HNIs), and 35% for Retail Individual Investors (RIIs who apply for less than Rs. 2 lakh worth of shares).
Investor Services

Q20. When a company merges with another, the process of exchanging old shares for new company's shares is called:

  1. A. Dematerialisation
  2. B. Exchange ratio allotment in scheme of amalgamation
  3. C. Rights issue
  4. D. Buyback
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Correct answer: B. Exchange ratio allotment in scheme of amalgamation

In a merger or amalgamation, shareholders of the merging company receive shares of the resultant company based on the exchange ratio (swap ratio) determined by valuers and approved by shareholders and NCLT.
Share Transfer

Q21. A Depository Participant (DP) is:

  1. A. A registrar appointed by the company
  2. B. An agent of NSDL or CDSL through whom investors open and operate Demat accounts
  3. C. A stock broker only
  4. D. An SEBI official
Show correct answer & explanation

Correct answer: B. An agent of NSDL or CDSL through whom investors open and operate Demat accounts

A Depository Participant (DP) is an intermediary registered with NSDL or CDSL (depositories) through whom investors open and operate their Demat accounts. Banks, brokers, and NBFCs can be DPs.
Corporate Actions

Q22. Buyback of shares means:

  1. A. Company buying shares from promoters only
  2. B. Company repurchasing its own shares from existing shareholders
  3. C. Foreign investor buying shares
  4. D. A hostile takeover
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Correct answer: B. Company repurchasing its own shares from existing shareholders

A share buyback is when a company repurchases its own shares from existing shareholders, typically at a premium to market price. It reduces the number of outstanding shares, increases EPS, and returns cash to shareholders.
IPO Process

Q23. Basis of Allotment in an oversubscribed IPO is finalised by:

  1. A. SEBI
  2. B. The lead manager, registrar, and stock exchange jointly
  3. C. The company's board alone
  4. D. AMFI
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Correct answer: B. The lead manager, registrar, and stock exchange jointly

When an IPO is oversubscribed, the Basis of Allotment — determining how shares will be proportionally distributed among applicants — is finalised jointly by the lead manager, the registrar, and the designated stock exchange.
Capital Markets

Q24. Face value (par value) of a share is:

  1. A. The current market price of the share
  2. B. The original value of a share as stated in the Memorandum of Association
  3. C. The IPO issue price
  4. D. The book value per share
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Correct answer: B. The original value of a share as stated in the Memorandum of Association

Face value (par value or nominal value) is the original value of a share as stated in the company's Memorandum of Association. Common face values are Rs. 10, Rs. 5, Rs. 2, or Re. 1. Dividends are often stated as % of face value.
Investor Services

Q25. If a shareholder loses physical share certificates, they can get them replaced through:

  1. A. Buying new shares in the market
  2. B. Applying to the company/RTA for duplicate certificates after completing required legal formalities
  3. C. SEBI directly
  4. D. Only through court order
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Correct answer: B. Applying to the company/RTA for duplicate certificates after completing required legal formalities

If physical share certificates are lost, the shareholder must notify the company/RTA, file a police report, publish a public notice, and submit an indemnity bond. The RTA then issues duplicate certificates after completing these formalities.
Regulatory Framework

Q26. IEPF stands for:

  1. A. International Equity Protection Fund
  2. B. Investor Education and Protection Fund — holds unclaimed dividends and shares
  3. C. Indian Exchange Protection Forum
  4. D. Inter-bank Equity Purchase Fund
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Correct answer: B. Investor Education and Protection Fund — holds unclaimed dividends and shares

IEPF (Investor Education and Protection Fund) is a fund maintained by the central government. Companies must transfer unpaid dividends (after 7 years) and unclaimed shares to IEPF. Investors can claim these back from IEPF.
Corporate Actions

Q27. Annual General Meeting (AGM) of a company must be held:

  1. A. Every 6 months
  2. B. Once every calendar year within 6 months of financial year end
  3. C. Every 2 years
  4. D. Only when required by SEBI
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Correct answer: B. Once every calendar year within 6 months of financial year end

As per the Companies Act, 2013, every company must hold its Annual General Meeting (AGM) once every calendar year, within 6 months from the close of the financial year (i.e., by September 30 for March year-end companies).
Share Transfer

Q28. BENPOS in RTA context refers to:

  1. A. Beneficial Position — a list of shareholders holding shares in demat form
  2. B. Bangalore Position Records
  3. C. Bond Equivalence Position
  4. D. Bank Endorsement Payment Order System
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Correct answer: A. Beneficial Position — a list of shareholders holding shares in demat form

BENPOS (Beneficial Position) is a file provided by depositories (NSDL/CDSL) to RTAs/companies. It lists all shareholders holding shares in demat form, including their Demat account details and quantity held, used for corporate action processing.
IPO Process

Q29. The lead manager in an IPO is responsible for:

  1. A. Printing share certificates
  2. B. Managing the entire IPO process including due diligence, pricing, marketing, and regulatory filings
  3. C. Setting share price alone
  4. D. Only collecting applications
Show correct answer & explanation

Correct answer: B. Managing the entire IPO process including due diligence, pricing, marketing, and regulatory filings

The lead manager (or Book Running Lead Manager) is responsible for managing the IPO — conducting due diligence, preparing the prospectus, filing with SEBI and NCLT, pricing, marketing (roadshows), and coordinating between all parties.
Regulatory Framework

Q30. T+1 settlement cycle for equity trading in India means:

  1. A. Trading and settlement happen simultaneously
  2. B. Shares and funds are settled within 1 business day after the trade date
  3. C. Settlement in 1 week
  4. D. Settlement in 2 days only for large institutions
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Correct answer: B. Shares and funds are settled within 1 business day after the trade date

India moved to T+1 (Trade plus 1) settlement cycle for equity trades, meaning shares and funds are settled within 1 business day after the trade date. This benefits investors by providing faster access to funds post-sale.
Investor Services

Q31. Nomination facility in company shares allows:

  1. A. Only legal heirs to receive shares
  2. B. Nominee to receive shares upon shareholder's death for convenient transmission
  3. C. Unlimited nominees per shareholder
  4. D. Only one nominee and cannot be changed
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Correct answer: B. Nominee to receive shares upon shareholder's death for convenient transmission

Nomination allows a shareholder to designate a nominee who will receive the shares upon the shareholder's death. This simplifies transmission. Shareholders can nominate up to 3 nominees with specific percentages and can change nominees anytime.
Corporate Actions

Q32. A company's book closure is:

  1. A. Closure of company's operations
  2. B. A period during which the shareholder register is closed and transfers are not registered — to determine dividend/bonus eligibility
  3. C. End of financial year
  4. D. Closure of company for AGM
Show correct answer & explanation

Correct answer: B. A period during which the shareholder register is closed and transfers are not registered — to determine dividend/bonus eligibility

Book closure is the period during which a company temporarily stops recording share transfers to prepare a definitive list of shareholders eligible for corporate benefits like dividends, rights issues, or bonus shares.
Capital Markets

Q33. Preference shares differ from equity shares in that they:

  1. A. Have voting rights like equity shares
  2. B. Carry preferential rights to dividend and capital repayment before equity shareholders
  3. C. Always convert to equity
  4. D. Are traded only in OTC market
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Correct answer: B. Carry preferential rights to dividend and capital repayment before equity shareholders

Preference shareholders get priority over equity shareholders in receiving dividends and returning of capital during liquidation. However, they typically do not have voting rights (except on matters directly affecting their interests).
IPO Process

Q34. Green Shoe Option (GSO) in an IPO allows:

  1. A. Only green energy companies to list
  2. B. Overallotment of up to 15% additional shares to stabilize post-listing price
  3. C. Refund of all applications
  4. D. Reserving shares for environmental companies
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Correct answer: B. Overallotment of up to 15% additional shares to stabilize post-listing price

The Green Shoe Option (GSO) allows the issue managers to allot up to 15% additional shares over and above the IPO size. Post-listing, the stabilisation agent uses GSO proceeds to stabilize the share price if it falls below the issue price.
Investor Services

Q35. A company's Annual Report contains:

  1. A. Only the profit figures for the year
  2. B. Directors' report, audited financial statements, corporate governance report, and management discussion & analysis
  3. C. Only the list of shareholders
  4. D. Only the AGM minutes
Show correct answer & explanation

Correct answer: B. Directors' report, audited financial statements, corporate governance report, and management discussion & analysis

A company's Annual Report is a comprehensive document containing audited financial statements (P&L, balance sheet, cash flow), Directors' Report, Corporate Governance Report, Management Discussion and Analysis, and other statutory disclosures.

How to use this set

Work through the questions in order without expanding the answers first, exactly as you would in the real Series II-A exam. Once you have picked an option, expand the answer to confirm whether you were right and read the explanation, even for questions you answered correctly, since the reasoning behind each option is where most of the learning happens.

If you get a question wrong, note the topic tag above the question and revisit that topic in the Series II-A exam page before your next attempt. When you are ready for exam-condition practice, use the timed mock test above; it shuffles these questions, applies the negative marking rule, and gives you a scored review at the end.