NISM Series X-A Ch.17: Operational Aspects of Investment Management — 200 Practice Questions

Q: According to SEBI Regulations mentioned in the text, public issues exceeding what size must be issued only in dematerialised form?

Rs. 10 crores. The text specifies: 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q: In the Register of Members (RoM) of a company, whose name is included in place of the investor to the extent of securities dematerialised?

The Depository's name. The text states: 'In the Register of Members (RoM) of the company, the depository’s name is included in the place of the investor to the extent of securities dematerialised.'

Q: As per the provided text, which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform?

Appointing a nominee for an investment.. Section 17.4 explicitly states, 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.' Other options describe actions that a PoA holder is generally allowed to perform

Q: Which of the following is NOT one of the two depositories currently operational in India?

Securities and Exchange Board of India (SEBI). The text explicitly states, "There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL)." SEBI is the regulatory body, not a depository

Q: If an NRI's investment in India was made from funds sourced in foreign currency, what is the repatriation status of the investment proceeds on sale or redemption of units?

It can be freely taken outside the country.. The text states, "If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable."

Q: Which of the following actions is an Attorney, holding a valid Power of Attorney (PoA), explicitly NOT permitted to perform on behalf of the grantor?

Appoint a nominee for an investment.. The text explicitly states: 'However, the attorney cannot appoint a nominee for the investment.' and later, 'A PoA holder cannot make or change nominations in an account or investment.' Other actions like purchase, sale, settlement, and initial investments are generally permitted based on the scope of the PoA

Multiple Choice Questions (175)

Q1 MCQ · 1 mark HardDematerialised Securities Features

Which statement accurately describes a characteristic of dematerialised securities?

AThey retain their distinctive identity in terms of share certificate or folio numbers.

BTheir ownership is described by the ISIN and a unique certificate number.

CThey are fungible, meaning they do not have a distinctive identity based on certificate or folio numbers.

DStamp duty is payable on dematerialisation, similar to other transfer of ownership transactions.

Q2 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations mentioned in the text, public issues exceeding what size must be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

CRs. 10 crores

DRs. 50 crores

Q3 MCQ · 1 mark MediumDematerialisation features

What does it mean for dematerialised securities to be 'fungible'?

AThey can be easily converted back to physical form.

BThey have a distinctive identity with unique certificate numbers.

CThey do not have a distinctive identity in terms of share certificate or folio numbers.

DThey can only be traded on specific stock exchanges.

Q4 MCQ · 1 mark MediumRegister of Members

In the Register of Members (RoM) of a company, whose name is included in place of the investor to the extent of securities dematerialised?

AThe R&T agent's name

BThe Depository Participant's (DP) name

CThe Depository's name

DThe beneficial owner's name

Q5 MCQ · 1 mark HardPower of Attorney (PoA) Limitations

As per the provided text, which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform?

AExecuting normal transactions like purchase and sale of securities.

BMaking initial investments in mutual funds or POS schemes.

CAppointing a nominee for an investment.

DOperating the grantor's account on behalf of the grantor for transactions granted by the PoA.

Q6 MCQ · 1 mark EasyDematerialisation Basics

Which of the following is NOT one of the two depositories currently operational in India?

ANational Securities Depository Ltd. (NSDL)

BCentral Depository Services (I) Ltd. (CDSL)

CSecurities and Exchange Board of India (SEBI)

DBoth A and B are operational depositories.

Q7 MCQ · 1 mark EasyRepatriation norms for NRIs

If an NRI's investment in India was made from funds sourced in foreign currency, what is the repatriation status of the investment proceeds on sale or redemption of units?

AIt is non-repatriable.

BIt can be freely taken outside the country.

CIt requires special RBI permission for repatriation.

DIt can be repatriated only after a lock-in period.

Q8 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action is taken by the Registrar and Share Transfer (R&T) agent regarding the physical share certificates received for dematerialisation?

AThey are returned to the investor after verification.

BThey are stored securely for a period of 5 years.

CThey are mutilated and marked with 'Surrendered for Dematerialisation'.

DThey are immediately forwarded to the depository for final processing.

Q9 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is an Attorney, holding a valid Power of Attorney (PoA), explicitly NOT permitted to perform on behalf of the grantor?

APurchase or sell securities.

BSettle transactions.

CAppoint a nominee for an investment.

DMake initial investments in mutual funds.

Q10 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action does the R&T agent take with the physical certificates once received?

AStores them securely for future reference.

BReturns them to the investor after electronic credit.

CMutilates them and marks them 'Surrendered for Dematerialisation'.

DSends them to SEBI for final approval.

Q11 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities for the grantor's account.

BSettle transactions related to the grantor's investments.

CAppoint a nominee for the grantor's investment.

DMake payments for purchases of securities.

Q12 MCQ · 1 mark MediumPower of Attorney (PoA)

Which of the following actions is an Attorney (holder of PoA) explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities.

BSettle transactions.

CAppoint a nominee for the investment.

DMake initial investments in mutual funds.

Q13 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q14 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, who is primarily responsible for verifying that the Dematerialisation Request Form (DRF) has the Depository Participant's (DP) authorization and that the physical documents match the electronic request?

AThe investor

BThe Depository

CThe Issuer/R&T agent

DThe Securities and Exchange Board of India (SEBI)

Q15 MCQ · 1 mark MediumDematerialised Securities Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be easily converted back to physical form.

BThey do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are traded exclusively on specific stock exchanges.

DThey can only be held by institutional investors.

Q16 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

BThey must be issued only in dematerialised form.

CInvestors have the option to choose between physical or dematerialised form.

DThey must be issued through a specific type of bank account.

Q17 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo provide loans against securities.

BTo hold securities of investors in electronic form.

CTo trade securities on behalf of investors.

DTo underwrite new issues of securities.

Q18 MCQ · 1 mark MediumNRI Residential Status

According to Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they are in India for a period of 60 days or more during the previous year AND what additional condition?

A182 days or more during the previous year.

B365 days or more during 4 years immediately preceding the previous year.

C90 days or more during the previous year.

D120 days or more during 2 years immediately preceding the previous year.

Q19 MCQ · 1 mark EasyDematerialised Securities

What is a key characteristic of dematerialised securities, as described in the Depositories Act, 1996?

AThey retain a distinctive identity based on share certificate number.

BThey are fungible, meaning they do not have a distinctive identity.

CStamp duty is always payable on their dematerialisation.

DThey are identified solely by the investor's folio number.

Q20 MCQ · 1 mark HardISIN

Regarding International Securities Identification Number (ISIN), which statement is correct as per the provided text?

AAn ISIN is a 10-character long identification code.

BSecurities issued by the same company but at different times are allocated the same ISIN.

CAn ISIN identifies dematerialised securities in terms of their distinctive numbers.

DAn ISIN has a pre-fix, a basic number, and a check digit.

Q21 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, after the Depository validates the information and forwards an electronic request, what is the next step for the R&T agent?

ATo directly dispatch the physical certificates to the shareholder.

BTo create a new folio or add to an existing folio.

CTo send the Rematerialisation Request Form (RRF) to the DP for cross-verification.

DTo cross-verify the RRF with the electronic confirmation received from the depository and forward it for processing.

Q22 MCQ · 1 mark HardNRI Investment Repatriation

An NRI investor made an investment in India using funds sourced from their earnings in Indian Rupees. Which of the following statements regarding the repatriation of proceeds from this investment is correct?

AThe proceeds can be freely repatriated to a foreign country, as all NRI investments are repatriable.

BThe proceeds are non-repatriable because the rupee is not fully convertible on capital account.

CThe proceeds can be repatriated only if the NRI obtains special permission from the Reserve Bank of India.

DThe proceeds can be clubbed with investments made from foreign currency for full repatriation.

Q23 MCQ · 1 mark MediumDematerialisation Rejection

Which of the following is a valid reason for a dematerialisation request to be fully or partially rejected by the R&T agent?

AThe investor has too many existing demat accounts.

BThe physical certificates have distinguishing marks like a hologram/watermark.

CMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

DThe request was submitted electronically before the physical documents were received.

Q24 MCQ · 1 mark EasyDematerialisation Process

What is the first step an investor takes when initiating the dematerialisation process for their physical securities?

AThe investor sends the securities directly to the Depository.

BThe investor hands over the securities along with the Dematerialisation Request Form (DRF) to the DP.

CThe investor directly contacts the R&T agent to verify certificate details.

DThe investor submits the DRF electronically to the Depository.

Q25 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions provides the service of holding investors' securities in electronic form?

ACommercial Bank

BReserve Bank of India

CDepository

DStock Exchange

Q26 MCQ · 1 mark MediumNRI Investment Repatriation

An NRI makes an investment in India using funds sourced from Indian Rupees earned in India. According to the text, what is the repatriation status of the proceeds from this investment upon sale or redemption?

AFreely repatriable, as long as the amount is below a specified limit.

BFreely repatriable, regardless of the amount.

CNon-repatriable, because the Rupee is not fully convertible on capital account.

DRepatriable, but only after obtaining special permission from RBI.

Q27 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q28 MCQ · 1 mark MediumPower of Attorney (PoA)

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the text?

APurchase securities.

BSettle transactions.

CAppoint a nominee for the investment.

DMake payments for purchases.

Q29 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform according to the text?

APurchase securities on behalf of the grantor.

BSettle transactions for the grantor.

CAppoint a nominee for the investment.

DMake payments for purchases.

Q30 MCQ · 1 mark HardNon-Resident Indian (NRI) Investment Repatriation

An NRI invests in India. If the source of funds for this investment was Indian Rupees earned in India, what is the repatriation status of the proceeds from the sale or redemption of these units?

AFreely repatriable, as long as the total amount is below a specified limit.

BNon-repatriable, due to the Rupee not being fully convertible on capital account.

CRepatriable, but only after obtaining special permission from the Reserve Bank of India.

DPartially repatriable, with a certain percentage allowed to be converted to foreign currency.

Q31 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the R&T agent take regarding the Register of Members (RoM) of the company?

AThe R&T agent adds the depository's name to the RoM.

BThe R&T agent removes the names of beneficial owners from the RoM.

CThe names of the beneficial owners will be included in the RoM, and the name of the depository removed to that extent.

DThe RoM is not affected by the rematerialisation process.

Q32 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for a dematerialisation request to be rejected by the R&T agent, according to the text?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe investor's account with the Depository Participant (DP) has insufficient balance.

DThe physical certificates are fake or stolen.

Q33 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the R&T agent take regarding the Register of Members (RoM) of the company?

AThe depository's name is added to the RoM.

BThe names of the beneficial owners are removed from the RoM.

CThe names of the beneficial owners are included in the RoM, and the depository's name is removed to that extent.

DThe RoM is not affected by rematerialisation.

Q34 MCQ · 1 mark HardNRI Definition (Income Tax Act)

An individual, who is a citizen of India, comes on a visit to India during the previous year. Under Section 6 of the Income-tax Act, to determine if this individual is a non-resident, which of the following conditions for residency is NOT applicable to them?

ABeing in India for a period of 182 days or more during the previous year.

BBeing in India for a period of 60 days or more during the previous year AND 365 days or more during 4 years immediately preceding the previous year.

CBeing in India for a period of 120 days or more during the previous year.

DBeing in India for a period of 90 days or more during the previous year.

Q35 MCQ · 1 mark HardNRI Residential Status

According to Section 6 of the Income Tax Act, for an individual who is a citizen of India or a person of Indian origin visiting India, which of the following conditions, if met *alone*, would NOT deem them a resident in India for a previous year?

AIf they are in India for a period of 182 days or more during the previous year.

BIf they are in India for a period of 60 days or more during the previous year AND 365 days or more during 4 years immediately preceding the previous year.

CIf they are in India for a period of 120 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

DBoth A and B.

Q36 MCQ · 1 mark HardNRI Investment Repatriation

Regarding Non-Resident Indian (NRI) investments in India, which of the following statements about repatriation of investment proceeds is FALSE?

AIf the source of funds for an NRI investment is foreign currency, the proceeds can be freely repatriated.

BIf the source of funds for an NRI investment is Indian Rupees, the proceeds are non-repatriable.

CInvestment made from foreign currency and Indian Rupee sources can be clubbed together for repatriation purposes.

DThe non-repatriable nature of Rupee investment proceeds is due to the Rupee not being fully convertible on capital account.

Q37 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be considered valid, according to the text?

AIt must be handwritten by the grantor.

BIt must be stamped according to the rules applicable in the state of execution.

CIt must be signed only by the attorney/holder on the last page.

DIt must be executed only by non-resident investors.

Q38 MCQ · 1 mark HardPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT permitted to perform on behalf of the grantor, according to the provided text?

APurchase and make payments for new investments.

BSettle transactions and redeem existing investments.

CAppoint a nominee for an investment.

DOperate the grantor's account for transactions.

Q39 MCQ · 1 mark MediumPower of Attorney limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, according to the provided text?

APurchase securities

BMake payment for purchases

CAppoint a nominee for an investment

DSettle transactions

Q40 MCQ · 1 mark HardPower of Attorney Validity

To be valid, a Power of Attorney (PoA) executed within India must meet several criteria. Which of the following is NOT universally required for a PoA to be valid, as per the text?

ATyped on a non-judicial stamp paper.

BSigned by the grantor on all pages.

CNotarised by a notary public.

DStamped according to the rules applicable in the state of execution.

Q41 MCQ · 1 mark HardRepatriation Norms for NRIs

An NRI makes an investment in India. Which of the following scenarios correctly describes the repatriation status of the investment proceeds?

AInvestment made from foreign currency is non-repatriable, while investment from Indian Rupees is freely repatriable.

BAll investment proceeds for NRIs are freely repatriable, regardless of the source of funds.

CInvestment made from foreign currency is freely repatriable, but investment made from Indian Rupees is non-repatriable.

DNRIs can freely club investments from both foreign currency and Indian Rupee sources for repatriation purposes.

Q42 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q43 MCQ · 1 mark MediumDematerialised Securities

Which of the following statements accurately describes the concept of 'fungible' in relation to dematerialised securities?

ADematerialised securities can be easily converted back to physical form.

BOnce dematerialised, a security loses its unique identity like share certificate or distinctive numbers.

CDematerialised securities can only be traded on specific exchanges.

DThe ownership of dematerialised securities is always held jointly.

Q44 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q45 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India according to the provided text?

AOne

BTwo

CThree

DFour

Q46 MCQ · 1 mark MediumNRI Investments and Repatriation

According to the chapter, regarding Non-Resident Indian (NRI) investments, under what condition are investment proceeds considered non-repatriable?

AIf the investment was made from funds earned in foreign currency.

BIf the investment was made from funds earned in Indian Rupees.

CIf the investment was made by a Person of Indian Origin (PIO).

DIf the investment was made in a dematerialised form.

Q47 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT authorized to perform on behalf of the grantor, according to the provided text?

ASettling transactions.

BMaking initial investments.

CAppointing a nominee for the investment.

DMaking payments for purchases.

Q48 MCQ · 1 mark MediumPower of Attorney (PoA) Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *not* allowed to perform on behalf of the grantor, as per the text?

APurchase securities

BSettle transactions

CAppoint a nominee for the investment

DMake payments for purchases

Q49 MCQ · 1 mark HardNRI Definition

As per Section 6 of the Income Tax Act, which of the following conditions, if satisfied, would deem an individual to be a resident in India in any previous year, with a specific exception for Indian citizens/PIOs visiting India?

AIf in India for a period of 182 days or more during the previous year.

BIf in India for a period of 90 days or more during the previous year and 180 days or more during 4 years immediately preceding the previous year.

CIf in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year, without any exception.

DIf in India for a period of 30 days or more during the previous year.

Q50 MCQ · 1 mark EasyDematerialisation Regulations

According to SEBI Regulations mentioned in the text, what is the requirement for public issues exceeding a certain size?

AThey must be issued only in physical form.

BThey must be issued only in dematerialised form if their size is in excess of Rs. 10 crores.

CThey must be issued in both physical and dematerialised forms simultaneously.

DThey must be issued only by NSDL, not CDSL.

Q51 MCQ · 1 mark MediumNRI Investments

An NRI investor made an investment in India using funds sourced from foreign currency. When these investments are sold or redeemed, what is the repatriation status of the proceeds?

AThe proceeds are non-repatriable, as the rupee is not fully convertible on capital account.

BThe proceeds are freely repatriable, regardless of the source of funds.

CThe proceeds are freely repatriable, as the source of funds was foreign currency.

DThe repatriation status depends on the specific investment scheme and not the source of funds.

Q52 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the Depositories Act 1996?

AOne

BTwo

CThree

DFour

Q53 MCQ · 1 mark EasyDepositories and Regulations

What is the primary function of a depository as described in the provided text?

ATo provide loans and advances against securities held in physical form.

BTo manage the investment portfolio of clients by buying and selling securities on their behalf.

CTo hold the securities of investors in electronic form and facilitate transactions.

DTo regulate the stock exchanges and ensure fair trading practices.

Q54 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo facilitate physical transfer of securities between investors.

BTo hold investors' securities in electronic form and facilitate transactions.

CTo provide loans against physical share certificates.

DTo issue new securities to investors directly.

Q55 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe Dematerialisation Request Number (DRN) in the physical documents does not match the electronic request.

DThe investor's account with the DP is already credited with the number of dematerialised shares.

Q56 MCQ · 1 mark MediumDematerialised Securities

Once a security is dematerialised, how is it primarily identified in the depository, according to the text?

ABy its original physical share certificate number and distinctive numbers.

BBy the investor's unique folio number and the date of dematerialisation.

CBy the International Securities Identification Number (ISIN) and the number of shares.

DBy the name of the issuing company and the market capitalization.

Q57 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the Depositories Act passed in 1996?

AOne

BTwo

CThree

DFour

Q58 MCQ · 1 mark EasyNRI Investment Repatriation

As per the text, if an NRI's investment in India originated from funds earned in foreign currency, what is its repatriation status?

AIt is non-repatriable.

BIt can be freely taken outside the country.

CIt requires special RBI approval for repatriation.

DIt can only be repatriated after a lock-in period.

Q59 MCQ · 1 mark HardNRI Residential Status

According to Section 6 of the Income Tax Act, an individual who is a citizen of India and was outside India, comes on a visit to India during the previous year for 70 days. In the four immediately preceding years, they were in India for a total of 370 days. What is their residential status for the previous year?

AResident in India

BNon-resident in India

CResident but Not Ordinarily Resident

DThe information is insufficient to determine.

Q60 MCQ · 1 mark HardRepatriation of NRI Investments

An NRI invests in India. If the source of funds for this investment was Indian Rupees, what is the repatriation status of the investment proceeds on sale or redemption of units, and why?

AFreely repatriable, because the rupee is fully convertible on capital account.

BNon-repatriable, because the rupee is not fully convertible on capital account.

CFreely repatriable, as all NRI investments are allowed free repatriation.

DNon-repatriable, but only if the investment amount exceeds a certain limit set by SEBI.

Q61 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions offers the service of holding the securities of investors in electronic form?

ACommercial Bank

BReserve Bank of India (RBI)

CDepository

DStock Exchange

Q62 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository as described in the chapter?

ATo provide banking services for investors' funds.

BTo hold investors' securities in physical form.

CTo hold investors' securities in electronic form.

DTo facilitate physical transfer of shares between investors.

Q63 MCQ · 1 mark EasyDematerialisation and Depositories

Which of the following statements accurately describes the primary function of a depository in the context of securities?

AIt facilitates physical transfer of share certificates between investors.

BIt provides a platform for trading derivatives and commodities.

CIt holds investors' securities in electronic form and facilitates transactions.

DIt acts as a regulator for the stock market in India.

Q64 MCQ · 1 mark MediumPower of Attorney Validity

If a Power of Attorney (PoA) is executed abroad, which of the following is a valid requirement for its initial attestation?

AIt must be typed on a non-judicial stamp paper from India.

BIt must be attested by a designated official of the Indian embassy abroad or by a notary abroad.

CIt must be signed only by the holder of the power of attorney.

DIt is not valid in India if executed abroad.

Q65 MCQ · 1 mark EasyDematerialisation process

Which of the following entities is NOT directly involved in the dematerialisation process as described in the chapter?

AInvestor

BDepository Participant (DP)

CIssuer/R&T agent

DStock Exchange

Q66 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what is the role of the Registrar and Transfer (R&T) agent after receiving the physical documents and electronic request from the Depository Participant (DP)?

ATo directly credit the investor's demat account.

BTo verify the documents, mutilate physical certificates, and update the Register of Members.

CTo issue new physical share certificates to the investor.

DTo determine the market value of the securities to be dematerialised.

Q67 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations, what is the requirement for public issues exceeding Rs. 10 crores?

AThey must be issued only in physical form.

BThey must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form.

DThey are exempt from dematerialisation requirements.

Q68 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT permitted to do on behalf of the grantor, according to the text?

APurchase securities.

BSettle transactions.

CAppoint a nominee for the investment.

DMake payments for purchases.

Q69 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what action does the R&T agent take with the physical certificates once the dematerialisation request is received and verified?

AReturns them to the investor as proof of dematerialisation.

BMutilates them and marks them 'Surrendered for Dematerialisation'.

CStores them securely for a period of 10 years.

DForwards them to SEBI for final approval.

Q70 MCQ · 1 mark MediumDematerialisation regulations

As per SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

BThey must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form.

DThey are exempt from dematerialisation requirements.

Q71 MCQ · 1 mark HardRematerialisation process details

During the rematerialisation process, what specific action does the R&T agent perform regarding the certificate numbers?

AAssigns new certificate numbers and distinctive numbers from the set of shares already dematerialised.

BReuses the original certificate numbers that were associated with the physical shares before dematerialisation.

CRequests the depository to assign new certificate numbers.

DPrints certificates without distinctive numbers, as they are no longer relevant.

Q72 MCQ · 1 mark EasyDematerialisation Basics

Which of the following statements accurately describes the primary function of a depository in India?

AIt provides loans against securities held in physical form.

BIt acts as a regulator for the securities market.

CIt offers the service of holding investor securities in electronic form.

DIt directly facilitates the trading of physical securities on stock exchanges.

Q73 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is explicitly stated as *not* allowed for a Power of Attorney (PoA) holder?

ASelling securities on behalf of the grantor.

BMaking payment for securities purchased by the grantor.

CAppointing a nominee for the grantor's investment.

DSettling transactions related to the grantor's investments.

Q74 MCQ · 1 mark HardPower of Attorney Limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, according to the provided text?

APurchase investments

BSettle transactions

CAppoint a nominee for an investment

DManage real estate (if granted by General PoA)

Q75 MCQ · 1 mark EasyDematerialisation basics

Which of the following acts allows companies and investors to issue, hold, and transact in securities through a depository?

AThe SEBI Act, 1992

BThe Companies Act, 2013

CThe Depositories Act, 1996

DThe Securities Contracts (Regulation) Act, 1956

Q76 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT authorised to perform on behalf of the grantor?

APurchase or sell securities.

BSettle transactions.

CAppoint a nominee for the investment.

DMake initial investments and subsequent purchases in mutual funds.

Q77 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository as described in the chapter text?

ATo facilitate physical transfer of securities between investors.

BTo hold the securities of investors in electronic form and provide transaction services.

CTo issue new securities for companies and manage their public offerings.

DTo provide advisory services for investment management to clients.

Q78 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions offers the service of holding securities of investors in electronic form in India?

AReserve Bank of India (RBI)

BSecurities and Exchange Board of India (SEBI)

CDepositories

DCommercial Banks

Q79 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo provide loans against securities.

BTo hold the securities of investors in electronic form.

CTo facilitate physical transfer of securities between investors.

DTo issue new securities for companies.

Q80 MCQ · 1 mark HardNRI Investment Repatriation

An NRI invests in India using funds earned in Indian Rupees from an income source in India. Later, they also invest using foreign currency transferred from their overseas account. If they decide to redeem their investments, which of the following statements regarding repatriation of proceeds is correct?

ABoth investments' proceeds can be freely repatriated as the investor is an NRI.

BOnly the proceeds from the investment made with foreign currency can be freely repatriated.

COnly the proceeds from the investment made with Indian Rupees can be freely repatriated.

DNeither investment's proceeds can be freely repatriated because the rupee is not fully convertible on capital account.

Q81 MCQ · 1 mark MediumDematerialisation Rejection Reasons

Which of the following is a valid reason for the rejection of a dematerialisation request by the R&T agent?

AThe investor has too many existing demat accounts.

BThe Dematerialisation Request Form (DRF) has the DP's authorization.

CThe certificates are fake or duplicates have been issued.

DThe investor's account with the DP is already credited with dematerialised shares.

Q82 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BCertificates are found to be fake or stolen.

CThe investor's account with the DP is already credited with the dematerialised shares.

DSignature of the holders does not tally with the records of the R&T agent.

Q83 MCQ · 1 mark EasyDematerialisation of Securities

Which of the following is NOT an eligible security for dematerialisation as per SEBI (Depository and Participants) Regulations of 1996?

AUnits of a mutual fund

BGovernment securities

CCollective investment scheme rights

DPhysical share certificates of a proprietary firm

Q84 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary service offered by a depository?

AProviding physical certificates for securities.

BHolding investors' securities in electronic form.

CManaging mutual fund portfolios directly.

DFacilitating foreign currency exchange for investors.

Q85 MCQ · 1 mark EasyDematerialisation Basics

Which of the following statements is TRUE regarding the dematerialisation of securities in India?

AAll public issues, regardless of size, are required to be issued only in dematerialised form.

BInvestors in mutual funds are mandated to hold their units only in dematerialised form.

COnce a share is dematerialised, it retains its distinctive identity in terms of share certificate number or folio numbers.

DThere are currently two depositories operational in India: National Securities Depository Ltd. (NSDL) and Central Depository Services (I) Ltd. (CDSL).

Q86 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe investor's account with the Depository Participant (DP) already has sufficient shares.

DThe physical certificates are fake or stolen.

Q87 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *not* allowed to perform on behalf of the grantor, as per the text?

APurchase of securities

BSale of securities

CSettlement of transactions

DAppointing a nominee for the investment

Q88 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT always a mandatory requirement for a Power of Attorney (PoA) to be valid in India, as per the provided text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

CNotarised by a notary public.

DStamped according to the rules applicable in the state.

Q89 MCQ · 1 mark MediumNRI Investments

An NRI makes an investment in India using funds sourced from foreign currency. When these investment proceeds are realized (e.g., through sale or redemption), what is their repatriation status?

AThey are always non-repatriable due to RBI norms.

BThey can be freely taken outside the country, i.e., they are repatriable.

CRepatriation depends on the specific investment scheme.

DOnly a portion of the proceeds is repatriable, as per SEBI guidelines.

Q90 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

CMust be notarised by a notary public in all cases.

DStamped according to the rules applicable in the state of execution.

Q91 MCQ · 1 mark MediumPower of Attorney (PoA) Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the provided text?

AIt must be typed on a non-judicial stamp paper.

BIt must be signed by the grantor on all pages.

CIt must be notarised by a notary public in all cases.

DIt must be signed by both the grantor and the holder on the last page.

Q92 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly PROHIBITED from performing on behalf of the grantor, as per the provided text?

ASettling claims related to the grantor's investments.

BMaking an initial investment in a mutual fund scheme.

CAppointing a nominee for the grantor's investment.

DSelling securities held in the grantor's demat account.

Q93 MCQ · 1 mark MediumRepatriation of Funds

For Non-Resident Indian (NRI) investments, what is the primary factor that determines whether investment proceeds on sale or redemption of units are repatriable?

AThe total value of the investment.

BThe duration for which the investment was held.

CThe source of the funds from which the original investment was made.

DThe type of security in which the investment was made.

Q94 MCQ · 1 mark MediumDematerialisation Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form at any time.

BThey do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are easily transferable between different depositories.

DThey are always identified by their original physical certificate numbers.

Q95 MCQ · 1 mark HardPower of Attorney Execution Abroad

When a Power of Attorney (PoA) is executed abroad, which of the following is a correct requirement for its validity in India?

AIt must be typed on a non-judicial stamp paper from the country of execution.

BIt must be attested by a designated official of the Indian embassy abroad or a notary abroad.

COnly the grantor's signature is required on the last page before sending to India.

DIt is not required to be stamped or notarized in India if already done abroad.

Q96 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary function of a depository in the context of securities?

ATo provide financial advice to investors for security transactions.

BTo hold securities of investors in electronic form and facilitate transactions.

CTo underwrite public issues of companies.

DTo regulate the stock market and ensure fair trading practices.

Q97 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, which of the following is NOT a verification step performed by the R&T agent?

AEnsuring the Dematerialisation Request Form (DRF) has the DP’s authorization.

BVerifying that the physical documents match the electronic request’s Dematerialisation Request Number (DRN).

CConfirming that the investor's bank account details match the records.

DChecking for distinguishing marks such as hologram/water mark on the certificates.

Q98 MCQ · 1 mark MediumDematerialisation Regulations

As per SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

BThey must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form, regardless of size.

DThey must be issued through a specific government-owned depository.

Q99 MCQ · 1 mark MediumNRI Investments and Repatriation

An NRI investor makes two separate investments in India. One investment is funded from income earned in foreign currency, and the other is funded from income earned in Indian Rupees. What is the repatriation status of the proceeds from these investments upon sale or redemption?

ABoth investments' proceeds can be freely repatriated outside India.

BProceeds from the investment funded by foreign currency are repatriable, but those from Indian Rupee funds are non-repatriable.

CBoth investments' proceeds are non-repatriable because the rupee is not fully convertible on capital account.

DThe repatriation status depends on the investor's residential status at the time of sale, not the source of funds.

Q100 MCQ · 1 mark EasyDepository Services

Which of the following best describes the primary function of a depository in the context of securities?

AIt provides loans to investors for purchasing securities.

BIt holds the securities of investors in electronic form.

CIt acts as a regulator for the stock market.

DIt offers insurance against market risks for securities.

Q101 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *prohibited* from performing on behalf of the grantor?

APurchasing securities.

BSettling transactions.

CAppointing a nominee for an investment.

DMaking payments for purchases.

Q102 MCQ · 1 mark HardNRI Residential Status

As per Section 6 of the Income-tax Act, an individual who is a citizen of India and is outside India, comes on a visit to India during the previous year. Which condition for being deemed a resident in India does NOT apply to this individual?

ABeing in India for 182 days or more during the previous year.

BBeing in India for 60 days or more during the previous year.

CBeing in India for 365 days or more during 4 years immediately preceding the previous year, in conjunction with the 60-day rule.

DBoth A and B do not apply.

Q103 MCQ · 1 mark EasyDematerialisation Basics

As per the Depositories Act, 1996, how many depositories are currently operational in India?

AOne

BTwo

CThree

DFour

Q104 MCQ · 1 mark EasyDematerialisation Eligibility

According to SEBI Regulations, public issues exceeding a certain size are required to be issued only in dematerialised form. What is this threshold?

ARs. 5 crores

BRs. 10 crores

CRs. 25 crores

DRs. 50 crores

Q105 MCQ · 1 mark HardPower of Attorney (PoA) Validity

For a Power of Attorney (PoA) to be valid, which of the following is a requirement that may vary among different entities and intermediaries?

AIt must be signed by two witnesses.

BIt must be executed on a judicial stamp paper.

CIt must be notarised by a notary public.

DIt must be registered with the local court.

Q106 MCQ · 1 mark MediumRematerialisation Process

In the process of rematerialisation, what happens to the investor's account in the records of the depository?

AIt shows an increase to the extent of rematerialisation.

BIt shows a reduction to the extent of rematerialisation.

CIt remains unchanged as the securities are only converted to physical form.

DIt is closed permanently after the process is complete.

Q107 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be valid, as specified in the text?

AIt must be typed on a plain paper.

BIt must be signed by the grantor on the last page only.

CIt must be stamped according to the rules applicable in the state in which it is executed.

DIt must always be notarised by a notary public, without exception.

Q108 MCQ · 1 mark MediumDematerialisation Rejection

Which of the following is NOT a valid reason for a dematerialisation request to be fully or partially rejected?

AMismatch in information between the DRF and physical certificates.

BCertificates are fake, stolen, or duplicates have been issued.

CThe securities do not pertain to the issuer/R&T agent.

DThe investor's account with the DP has insufficient balance.

Q109 MCQ · 1 mark EasyNRI Residential Status

Under Section 6 of the Income-tax Act, an individual is deemed to be a resident in India if they are in India for a period of 60 days or more during the previous year AND what other condition?

A90 days or more during the 2 years immediately preceding the previous year.

B120 days or more during the 3 years immediately preceding the previous year.

C182 days or more during the 4 years immediately preceding the previous year.

D365 days or more during the 4 years immediately preceding the previous year.

Q110 MCQ · 1 mark MediumDematerialised Securities Features

What does it mean for dematerialised securities to be 'fungible' as described in the text?

AThey can be converted back to physical form at any time without restriction.

BThey do not have a distinctive identity in terms of share certificate number or folio numbers once dematerialised.

CThey can only be traded on specific stock exchanges.

DThey are subject to a fixed rate of stamp duty upon transfer.

Q111 MCQ · 1 mark HardPower of Attorney

An investor, Mr. Sharma, grants a Power of Attorney (PoA) to his financial advisor, Ms. Gupta. According to the NISM regulations, which of the following actions can Ms. Gupta NOT perform on behalf of Mr. Sharma, even if explicitly mentioned in the PoA?

APurchase and sell securities.

BSettle transactions and initiate redemptions.

COpen a new demat account for Mr. Sharma.

DManage Mr. Sharma's real estate and other property affairs if a General PoA is granted.

Q112 MCQ · 1 mark MediumDematerialisation Regulations

As per SEBI Regulations, what is the minimum size for public issues to be mandatorily issued only in dematerialised form?

ARs. 5 crores

BRs. 10 crores

CRs. 15 crores

DRs. 20 crores

Q113 MCQ · 1 mark HardNRI Investments

An individual, classified as a Non-Resident Indian (NRI), makes an investment in India using funds earned in Indian Rupees from a source within India. Which of the following statements regarding the repatriation of proceeds from this investment is correct?

AThe investment proceeds can be freely repatriated as foreign currency, irrespective of the source of funds.

BThe investment proceeds are non-repatriable because the Indian Rupee is not fully convertible on the capital account.

CThe investment proceeds can be repatriated only if the NRI has also made an equivalent investment using foreign currency.

DThe investment proceeds are repatriable, but only after a lock-in period specified by the RBI.

Q114 MCQ · 1 mark EasyDematerialisation Regulations

SEBI Regulations require all public issues whose size exceeds a certain amount to be issued only in dematerialised form. What is this amount?

ARs. 5 crores

BRs. 10 crores

CRs. 25 crores

DRs. 50 crores

Q115 MCQ · 1 mark HardDematerialisation Process

During the dematerialisation process, which entity is responsible for mutilating the physical certificates by marking them 'Surrendered for Dematerialisation' and subsequently destroying them after the process is complete?

AThe Depository Participant (DP)

BThe Depository

CThe Investor

DThe Registrar and Transfer (R&T) agent

Q116 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q117 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the text?

ASigned by the grantor on all pages.

BNotarised by a notary public in all cases.

CTyped on a non-judicial stamp paper.

DStamped according to the rules applicable in the state of execution.

Q118 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the provided text?

AOne

BTwo

CThree

DFour

Q119 MCQ · 1 mark EasyRematerialisation

What is the primary purpose of rematerialisation of securities?

ATo convert electronic holdings of securities into physical form.

BTo convert physical securities into electronic form.

CTo transfer securities from one demat account to another.

DTo consolidate multiple physical share certificates into a single electronic entry.

Q120 MCQ · 1 mark MediumNRI Definition (Income Tax Act)

As per Section 6 of the Income-tax Act, an individual is deemed to be resident in India if they are in India for a period of 60 days or more during the previous year AND for how many days or more during the 4 years immediately preceding the previous year?

A90 days

B182 days

C270 days

D365 days

Q121 MCQ · 1 mark MediumNRI Residential Status (Income Tax Act)

Under Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they are in India for 60 days or more during the previous year and for how many days or more during the 4 years immediately preceding the previous year?

A182 days

B365 days

C730 days

D120 days

Q122 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be considered valid in India, as per the text?

AIt must be executed on a plain paper, regardless of where it is executed.

BIt must be signed by the grantor only on the last page.

CIt must be typed on a non-judicial stamp paper.

DIt must always be notarized by a notary public, without exception.

Q123 MCQ · 1 mark MediumNRI Investments

Mr. Ajay, a Non-Resident Indian (NRI), makes an investment in India using funds sourced from his earnings in Indian Rupees within India. Which of the following statements is TRUE regarding the repatriation of proceeds from this investment?

AThe investment proceeds can be freely repatriated outside India in foreign currency.

BThe investment proceeds are non-repatriable because the rupee is not fully convertible on capital account.

CThe investment proceeds can be repatriated only if the initial investment amount exceeds a specific threshold.

DThe repatriation norms depend on the duration for which the investment was held.

Q124 MCQ · 1 mark HardDematerialisation Rejection

All of the following are valid reasons for a dematerialisation request to be rejected, EXCEPT:

AThe physical certificates have distinguishing marks such as a hologram or watermark.

BThere is a mismatch in the information between the Dematerialisation Request Form (DRF) and the physical certificates.

CThe securities stand in a different name(s) from that mentioned in the DRF.

DThe signature of the holders does not tally with the records of the R&T agent.

Q125 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository in the context of securities?

ATo provide financial advice to investors.

BTo hold securities of investors in electronic form.

CTo facilitate physical transfer of securities.

DTo underwrite public issues of companies.

Q126 MCQ · 1 mark HardDematerialisation Process and Fungibility

Which statement accurately describes a characteristic of dematerialised securities?

AThey retain a distinctive identity based on share certificate number or folio numbers.

BThey are identified in terms of the ISIN and the number of shares, and are fungible.

CStamp duty is payable on dematerialisation, similar to other transfer of ownership transactions.

DThe R&T agent makes a debit entry in the electronic records of the depository upon dematerialisation.

Q127 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what specific words are required to be mutilated on the physical certificates received by the R&T agent?

A'Cancelled for Dematerialisation'

B'Destroyed for Electronic Conversion'

C'Surrendered for Dematerialisation'

D'Invalid for Physical Holding'

Q128 MCQ · 1 mark MediumPower of Attorney

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor?

APurchase and sale of securities

BSettlement of transactions

CAppointing a nominee for an investment

DPayment for purchase of investments

Q129 MCQ · 1 mark EasyDematerialisation Characteristics

What does it mean when the text states that 'dematerialised securities are fungible'?

AThey can be converted back to physical form at any time.

BThey do not have a distinctive identity in terms of share certificate number or distinctive numbers.

CThey can only be traded on specific exchanges.

DThey are always issued with a specific maturity date.

Q130 MCQ · 1 mark EasyDematerialisation Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form easily.

BThey do not have a distinctive identity in terms of share certificate or folio numbers.

CThey can only be traded on specific stock exchanges.

DThey are subject to stamp duty upon transfer.

Q131 MCQ · 1 mark HardDematerialisation Process

An investor submits a Dematerialisation Request Form (DRF) along with physical certificates to their Depository Participant (DP). Which of the following, if discovered by the R&T agent during verification, would lead to the REJECTION of the dematerialisation request?

AThe physical certificates have the words ‘Surrendered for Dematerialisation’ mutilated on them by the R&T agent.

BThe dematerialisation request has been received by the R&T agent in both electronic and physical forms.

CThe signature of the holder on the DRF does not tally with the records maintained by the R&T agent.

DThe Register of Members (RoM) of the company is updated to include the depository's name.

Q132 MCQ · 1 mark HardPower of Attorney Validity

According to the text, which of the following is *not* a universal requirement for a Power of Attorney (PoA) to be considered valid in India?

AIt must be typed on a non-judicial stamp paper.

BIt must be signed by the grantor on all pages.

CIt must be notarised by a notary public in all cases.

DIt must be stamped according to the rules applicable in the state of execution.

Q133 MCQ · 1 mark MediumPower of Attorney validity

For a Power of Attorney (PoA) to be valid, which of the following is NOT always a mandatory requirement as per the text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

CNotarised by a notary public.

DStamped according to the rules applicable in the state.

Q134 MCQ · 1 mark EasyRematerialisation Definition

What is the process of converting the electronic holding of a security back into physical form called?

ADematerialisation

BRematerialisation

CReconstitution

DDigitalisation

Q135 MCQ · 1 mark EasyDematerialisation Regulations

As per SEBI Regulations, public issues exceeding what size are required to be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

CRs. 10 crores

DRs. 50 crores

Q136 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, as per the provided text?

APurchase investments.

BSettle transactions.

CAppoint a nominee for the investment.

DRedeem investments.

Q137 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what is the role of the R&T agent once the physical certificates are received and verified?

ATo return the physical certificates to the investor after verification.

BTo destroy the physical certificates immediately upon receipt.

CTo mutilate the certificates with the words 'Surrendered for Dematerialisation' and verify details before further processing.

DTo issue new physical certificates in electronic form.

Q138 MCQ · 1 mark EasyPower of Attorney

Which of the following actions is explicitly stated as *not* allowed for a Power of Attorney (PoA) holder?

APurchase of securities on behalf of the grantor.

BSale of securities on behalf of the grantor.

CAppointing a nominee for the investment.

DSettlement of transactions on behalf of the grantor.

Q139 MCQ · 1 mark MediumNRI Investment Repatriation

As per the text, what is the repatriation status of investment proceeds for Non-Resident Indians (NRIs) if the original source of funds was Indian Rupees?

AFreely repatriable to any foreign country.

BRepatriable only to specific countries approved by RBI.

CNon-repatriable, as the rupee is not fully convertible on capital account.

DRepatriable after a lock-in period of 5 years.

Q140 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the R&T agent to reject a dematerialisation request, as per the provided text?

AMismatch in the information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe investor's account with the Depository Participant (DP) does not have sufficient balance.

DThe signature of the holders does not tally with the records of the R&T agent.

Q141 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, after the Depository Participant (DP) validates the investor's request and forwards it electronically, which entity is responsible for assigning a new certificate number and distinctive numbers for the shares?

AThe Depository

BThe Investor's Bank

CThe Registrar and Transfer (R&T) agent

DThe Securities and Exchange Board of India (SEBI)

Q142 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what specific action does the R&T agent take regarding certificate numbers and distinctive numbers?

AReuses the original certificate numbers from before dematerialisation.

BAssigns a new certificate number and distinctive numbers from the set of shares already dematerialised.

CRequests the investor to provide new certificate numbers.

DDoes not assign any certificate numbers as the securities remain electronic.

Q143 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe Dematerialisation Request Number (DRN) in the physical documents matches with the DRN in the electronic request.

DThe signature of the holders does not tally with the records of the R&T agent.

Q144 MCQ · 1 mark HardDematerialisation Process Details

During the dematerialisation process, what critical step is taken by the R&T agent regarding the Register of Members (RoM) of the company?

AThe investor's name is retained in the RoM, with a special notation for dematerialised securities.

BThe R&T agent creates a new RoM exclusively for dematerialised securities.

CThe depository's name is included in the RoM in place of the investor to the extent of securities dematerialised.

DThe RoM is completely digitalised and no longer maintained in physical form by the R&T agent.

Q145 MCQ · 1 mark HardPower of Attorney

Which of the following statements about a Power of Attorney (PoA) holder's rights and limitations is correct, as per the provided text?

AA PoA holder can open or close a bank account on behalf of the grantor.

BThe grantor of a PoA cannot operate the account once a PoA has been granted.

CA PoA holder is authorized to appoint a nominee for the investment.

DA PoA holder can make initial investments and subsequent purchases in mutual funds on behalf of the grantor.

Q146 MCQ · 1 mark MediumRematerialisation

During the rematerialisation of securities, which entity is responsible for assigning a new certificate number and distinctive numbers from the set of shares already dematerialised?

AThe Depository Participant (DP)

BThe Depository

CThe Registrar and Transfer (R&T) agent

DThe investor

Q147 MCQ · 1 mark EasyNRI Investments

If an NRI's investment in India originated from funds earned in foreign currency, what is the repatriation status of the proceeds on sale or redemption?

AIt is non-repatriable due to RBI norms.

BIt can be freely taken outside the country.

CIt is repatriable only with prior approval from RBI.

DIt depends on the duration of the investment.

Q148 MCQ · 1 mark HardNRI Residential Status Exception

When does the condition (60 days or more in previous year AND 365 days or more in 4 preceding years) for determining residential status under Section 6 of the Income-tax Act NOT apply?

AWhen the individual is a foreign national visiting India for medical treatment.

BWhen the individual is an Indian citizen or a person of Indian origin who comes on a visit to India during the previous year.

CWhen the individual is a spouse of an Indian citizen residing abroad.

DWhen the individual is a student pursuing higher education in India.

Q149 MCQ · 1 mark MediumDematerialisation rejection reasons

Which of the following is NOT a valid reason for a dematerialisation request to be fully or partially rejected, as per the provided text?

AMismatch in information between DRF and physical certificates.

BCertificates are fake or stolen.

CThe investor's account has insufficient balance.

DSignature of the holders does not tally with R&T agent records.

Q150 MCQ · 1 mark MediumDematerialisation Eligibility

Which of the following is NOT explicitly mentioned as a category of security eligible for dematerialisation under the SEBI (Depository and Participants) Regulations of 1996 in the provided text?

AUnits of a mutual fund

BGovernment securities

CBank fixed deposits

DUnlisted securities

Q151 MCQ · 1 mark MediumNRI Residential Status

According to Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they satisfy either of two conditions. One condition is being in India for 182 days or more during the previous year. What is the other condition?

ABeing in India for 90 days or more during the previous year and 180 days or more during 4 years immediately preceding.

BBeing in India for 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

CBeing in India for 120 days or more during the previous year and 240 days or more during 3 years immediately preceding.

DBeing in India for 150 days or more during the previous year and 300 days or more during 2 years immediately preceding.

Q152 MCQ · 1 mark MediumDematerialisation Eligibility

Which of the following categories of securities is NOT explicitly mentioned as eligible for dematerialisation under SEBI (Depository and Participants) Regulations of 1996 in the provided text?

AShares, scrips, stocks, bonds, debentures.

BUnits of a mutual fund, rights under a collective investment scheme.

CVenture capital funds, certificates of deposit, commercial paper.

DReal estate investment trust units.

Q153 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository as described in the chapter?

ATo provide loans to investors against their securities.

BTo hold investors' securities in electronic form.

CTo facilitate physical transfer of share certificates.

DTo act as a regulatory body for stock exchanges.

Q154 MCQ · 1 mark EasyNRI Investment Repatriation

According to the text, what determines whether the investment proceeds from an NRI investment are repatriable or non-repatriable?

AThe duration of the investment.

BThe type of security purchased (e.g., equity vs. debt).

CThe source of the funds from which the original investment was made.

DThe current market value of the investment.

Q155 MCQ · 1 mark EasyIndian Depositories

How many depositories are currently operational in India, as per the text?

AOne

BTwo

CThree

DFour

Q156 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary function of a depository in India?

ATo provide loans against securities held in physical form.

BTo act as a custodian for physical share certificates.

CTo hold securities of investors in electronic form and facilitate transactions.

DTo regulate the issuance of new securities by companies.

Q157 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q158 MCQ · 1 mark EasyDematerialisation

According to the Depositories Act, 1996, what happens to the physical securities once they are dematerialised?

AThey are returned to the investor for safekeeping.

BThey are stored by the depository for a period of 10 years.

CThey are destroyed by the R&T agent.

DThey are converted into digital images and archived.

Q159 MCQ · 1 mark HardNRI Definition (Income Tax Act)

As per Section 6 of the Income Tax Act, under which circumstance would an individual, who is a citizen of India, definitely be considered a 'resident in India' for the previous year?

AIf they are in India for a period of 60 days during the previous year and 300 days during the 4 years immediately preceding the previous year.

BIf they are in India for a period of 180 days during the previous year.

CIf they are in India for a period of 70 days during the previous year, having come on a visit, and 400 days during the 4 years immediately preceding the previous year.

DIf they are in India for a period of 182 days or more during the previous year.

Q160 MCQ · 1 mark HardNRI Investment Repatriation

An individual who is an NRI makes an investment in India. Which of the following statements regarding the repatriation of investment proceeds is accurate?

AAll investment proceeds from an NRI's investment in India are freely repatriable, regardless of the source of funds.

BIf the source of funds for the original investment was Indian Rupees, the proceeds are generally non-repatriable.

CInvestment made from foreign currency and Indian Rupees can be clubbed together for repatriation purposes.

DRepatriation norms are determined solely by the investor's residential status at the time of sale, not the source of funds.

Q161 MCQ · 1 mark EasyDepositories

How many depositories are currently operational in India as per the provided text?

AOne

BTwo

CThree

DFour

Q162 MCQ · 1 mark MediumNRI Investments and Repatriation

An individual who is a citizen of India, living outside India, makes an investment in India using funds sourced from their foreign currency earnings. Based on the provided text, what is the repatriation status of the proceeds from this investment?

AThe proceeds are non-repatriable because the rupee is not fully convertible on capital account.

BThe proceeds are freely repatriable as the source of funds was foreign currency.

CThe repatriation status depends on the specific type of security invested in.

DThe proceeds can be repatriated only if clubbed with investments made from Indian Rupee earnings.

Q163 MCQ · 1 mark EasyCharacteristics of Dematerialised Securities

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form at any time.

BThey do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are traded exclusively on international stock exchanges.

DThey are always issued with a fixed maturity period.

Q164 MCQ · 1 mark EasyDematerialisation Regulations

What is the minimum public issue size that SEBI Regulations require to be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

CRs. 10 crores

DRs. 50 crores

Q165 MCQ · 1 mark MediumNRI Investment Repatriation

An NRI investor makes an investment in India using funds sourced from Indian Rupees earned within India. Based on the text, what will be the repatriation status of the proceeds from the sale or redemption of these units?

AFreely repatriable, as all NRI investments are repatriable.

BNon-repatriable, as the source of funds is Indian Rupees.

CRepatriable, but only after obtaining special permission from the RBI.

DPartially repatriable, depending on the investment amount.

Q166 MCQ · 1 mark HardDematerialisation Process

An investor submits a Dematerialisation Request Form (DRF) along with physical share certificates to their Depository Participant (DP). Which of the following, if found by the R&T agent, would be a valid reason for *rejecting* the dematerialisation request?

AThe physical certificates have the words 'Surrendered for Dematerialisation' mutilated on them.

BThe Dematerialisation Request Number (DRN) in the physical documents matches the electronic request.

CThe securities do not pertain to the issuer/R&T agent.

DThe DP's authorization is present on the DRF.

Q167 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as mentioned in the text?

AOne

BTwo

CThree

DFour

Q168 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the Registrar and Transfer (R&T) agent take regarding the Register of Members (RoM) of the company?

AThe R&T agent removes the beneficial owner's name and includes the depository's name.

BThe R&T agent assigns a new ISIN to the rematerialised securities.

CThe names of the beneficial owners are included in the RoM, and the depository's name is removed to that extent.

DThe R&T agent ensures that no revenue stamps are affixed, as rematerialisation is exempt from such duties.

Q169 MCQ · 1 mark EasyPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities.

BSettle transactions.

CAppoint a nominee for the investment.

DMake initial investments in mutual funds.

Q170 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what action does the R&T agent take with the physical certificates once the dematerialisation request is processed and approved?

AThey are returned to the investor for record-keeping.

BThey are sent to SEBI for final approval.

CThey are mutilated and have the words ‘Surrendered for Dematerialisation” on them.

DThey are stored indefinitely without any physical alteration.

Q171 MCQ · 1 mark HardNRI Investment Repatriation

An NRI makes an investment in India using funds sourced from Indian Rupees earned in India. What is the repatriation status of the proceeds from the sale or redemption of this investment?

AFreely repatriable, as all NRI investments are repatriable.

BNon-repatriable, because the rupee is not fully convertible on capital account.

CPartially repatriable, depending on the RBI's discretion.

DRepatriable, but only after a lock-in period of 5 years.

Q172 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action does the R&T agent take with the physical certificates once they are received from the DP?

AThey are immediately returned to the investor after verification.

BThey are stored securely in physical form by the R&T agent.

CThey are mutilated and have the words ‘Surrendered for Dematerialisation” on them.

DThey are sent directly to the depository for final processing.

Q173 MCQ · 1 mark HardRematerialisation Process

During the rematerialisation process, what is the R&T agent required to do regarding revenue stamps?

AEnsure that the applicable revenue stamps are affixed to the newly printed certificates.

BCollect revenue stamps from the investor before processing the request.

CWaive the requirement for revenue stamps, as it is a conversion process.

DVerify that the original dematerialisation request included revenue stamps.

Q174 MCQ · 1 mark EasyDematerialisation

Which of the following statements is TRUE regarding depositories in India?

AThere is only one depository operational in India, NSDL.

BDepositories hold investors' securities in physical form.

CSEBI Regulations require all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.

DInvestors in mutual funds are mandated to convert their holdings into demat mode.

Q175 MCQ · 1 mark EasyDepositories Act

The Depositories Act, which allows companies and investors to issue, hold, and transact in securities through a depository, was passed in which year?

A1992

B1996

C2000

D2005

Case-Based Questions (5 sets)

Case 1 Case-Based · 1 mark each Operational Aspects of Investment Management (Dematerialisation, PoA, NRI Accounts)

Mr. Rajiv Sharma, a 45-year-old Person of Indian Origin (PIO), resides in the USA. He recently inherited a portfolio of Indian shares from his late father, which are still held in physical certificate form. Mr. Sharma wishes to convert these physical shares into electronic form to facilitate easier trading and management. He also plans to make fresh investments in Indian mutual funds. Due to his frequent travel and residency abroad, Mr. Sharma wants to grant a Power of Attorney (PoA) to his younger sister, Ms. Priya Sharma, who lives in Mumbai. He intends for Ms. Priya to manage his investment transactions, including buying and selling securities, and handling other operational aspects on his behalf. Mr. Sharma is particularly keen to understand the process of dematerialisation and the scope and limitations of a PoA, especially concerning new account openings and fund repatriation. He holds an NRE (Non-Resident External) account in India, which he uses for his foreign currency remittances, and also has an NRO (Non-Resident Ordinary) account where he deposits income earned in India, such as rent from a property.

Medium Sub-question 1

Mr. Sharma has granted a General Power of Attorney to Ms. Priya Sharma. Which of the following actions can Ms. Priya NOT perform on Mr. Sharma's behalf using this PoA?

APurchase and sell mutual fund units.

BSettle investment transactions and make payments.

COpen a new demat account for Mr. Sharma.

DManage real estate and other property.

Medium Sub-question 2

Mr. Sharma initiates the dematerialisation process for his inherited physical shares. Which of the following is a mandatory step in this process?

AThe investor must personally visit the depository to submit the physical certificates.

BThe Dematerialisation Request Form (DRF) must be submitted to the Issuer/R&T agent directly.

CThe physical certificates along with the DRF must be handed over to a Depository Participant (DP).

DThe R&T agent issues new physical certificates after verification.

Easy Sub-question 3

What is the primary role of a depository in the context of Mr. Sharma's physical share certificates?

ATo provide financial advice on investment strategies.

BTo hold securities of investors in electronic form.

CTo act as a registrar and transfer agent for companies.

DTo regulate the stock market operations in India.

Easy Sub-question 4

Mr. Sharma wants to convert his physical share certificates into electronic form. What is this process officially known as?

ARematerialisation

BRepatriation

CDematerialisation

DConsolidation

Hard Sub-question 5

Mr. Sharma plans to invest in new mutual funds using funds from his NRE account. If he later redeems these mutual fund units, what will be the repatriation status of the proceeds?

AThe proceeds will be fully non-repatriable, as all rupee investments are non-repatriable.

BThe proceeds will be freely repatriable, as the source of funds was foreign currency.

CThe proceeds can only be repatriated up to a certain annual limit set by RBI.

DThe repatriation status will depend on the duration of his investment.

Case 2 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajeev Mehta, a 45-year-old Indian citizen, has been working and residing in the USA for the past 10 years. He visits India once a year for about 45 days to meet his family. Recently, he inherited a portfolio of Indian investments from his late father, which includes several physical share certificates of an old, listed Indian company and some mutual fund units held in statement of account form. Rajeev also holds an NRE bank account in India. He wishes to streamline these holdings, convert them to electronic form, and potentially grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, who resides in Mumbai, to manage his Indian investment affairs more efficiently. He is particularly concerned about the legalities, documentation, and operational aspects involved in these processes. Rajeev's father had acquired the physical shares before the Dematerialisation Act came into effect, and they have been lying in physical form since. The mutual fund units were purchased over the years and are currently held as 'Statement of Account' rather than in a demat account. Rajeev wants to understand if all these securities can be dematerialised and what steps are involved. He also wants to know the scope and limitations of a PoA, especially since he cannot be physically present for all transactions. He is also keen to ensure that any investment proceeds from his NRE account remain repatriable.

Easy Sub-question 1

Based on the provided chapter text, which of the following statements is TRUE regarding the dematerialisation of Mr. Rajeev Mehta's inherited physical share certificates and mutual fund units?

AOnly the physical share certificates can be dematerialised, not the mutual fund units.

BBoth the physical share certificates and the mutual fund units are eligible for dematerialisation.

CNeither the physical share certificates nor the mutual fund units can be dematerialised as they are inherited.

DMutual fund units can only be held in physical 'Statement of Account' form and cannot be dematerialised.

Hard Sub-question 2

Considering Mr. Rajeev Mehta's situation as an NRI residing in the USA, what specific requirements must be met for the Power of Attorney (PoA) granted to Ms. Priya Sharma to be valid in India, especially if executed abroad?

AIt must be typed on a non-judicial stamp paper, signed by Rajeev on all pages, and notarised in the USA.

BIt can be typed on a plain paper, attested by a designated official of the Indian embassy abroad, signed by Rajeev on all pages, and then signed by Priya, stamped and notarised in India.

CIt must be executed only in India, signed by both Rajeev and Priya in front of a notary public.

DRajeev must be physically present in India to sign the PoA on a non-judicial stamp paper, and it must be notarised.

Medium Sub-question 3

Mr. Rajeev Mehta ensures that all his new investments in India are made from funds transferred from his NRE (Non-Resident External) bank account, which holds foreign currency. Based on the chapter, what is the implication for the proceeds from these investments, and how does Rajeev's residential status align with the Income Tax Act?

AThe investment proceeds will be non-repatriable, and Rajeev is considered a resident as he visits India annually.

BThe investment proceeds will be repatriable, and Rajeev is considered a non-resident because his visit duration is less than 60 days in the previous year, with the exception for visitors.

CThe investment proceeds will be non-repatriable, and Rajeev is considered a non-resident because he resides abroad for more than 182 days.

DThe investment proceeds will be repatriable, but Rajeev is considered a resident because he has been in India for more than 365 days in the preceding four years.

Easy Sub-question 4

Mr. Rajeev Mehta plans to grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, to manage his investment affairs. Which of the following actions CANNOT be performed by Ms. Priya Sharma as a PoA holder?

APurchase and sell securities on behalf of Rajeev.

BMake initial and subsequent investments in mutual funds.

CAppoint a nominee for Rajeev's investments.

DSettle transactions and redeem investments.

Medium Sub-question 5

Mr. Rajeev Mehta proceeds to dematerialise his physical share certificates. Which of the following is the correct sequence of actions for the initial steps involving the investor and Depository Participant (DP)?

AInvestor submits Dematerialisation Request Form (DRF) to R&T agent -> R&T agent sends request to DP.

BInvestor hands over physical securities and DRF to DP -> DP sends request electronically to issuer/R&T agent and depository.

CDP verifies physical securities -> Investor submits DRF to DP.

DIssuer/R&T agent mutilates certificates -> Investor receives DRN from DP.

Case 3 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajiv Sharma, a 45-year-old Indian citizen, has been residing and working in Dubai for the past 10 years. He visits India annually for approximately 45 days to spend time with his family. Recently, he inherited some physical share certificates of 'BrightFuture Ltd.' from his late grandfather, which were issued in 1995. He also holds units of an Indian mutual fund, for which he has received Statement of Accounts. Mr. Sharma wishes to convert all his physical holdings into electronic form for easier management. Furthermore, he wants to appoint his sister, Ms. Priya Sharma, to manage his Indian financial transactions, including buying and selling securities, making payments, and settling transactions, as he is often unavailable due to his work commitments abroad. He approaches an Investment Adviser for comprehensive guidance on these operational aspects, including his residential status, dematerialisation process, Power of Attorney requirements, and implications for future investments.

Easy Sub-question 1

Based on the information provided, what would be Mr. Rajiv Sharma's residential status for income tax purposes in India for the current financial year?

AResident

BNon-Resident Indian (NRI)

CResident but Not Ordinarily Resident (RNOR)

DOverseas Citizen of India (OCI)

Hard Sub-question 2

Mr. Sharma decides to make a fresh investment of INR 5,00,000 in an Indian equity mutual fund. If he intends to repatriate the investment proceeds (capital and gains) back to Dubai at a later date, what crucial factor must he consider regarding the source of these funds?

AThe funds must originate from a NRE (Non-Resident External) account or foreign currency remittance to ensure repatriability.

BAny funds, whether from NRO (Non-Resident Ordinary) account or NRE account, are freely repatriable as per current RBI guidelines for NRIs.

CThe investment must be made from funds earned specifically in India to be eligible for repatriation.

DRepatriation is only possible if the investment amount exceeds a certain threshold set by SEBI.

Medium Sub-question 3

During the dematerialisation process for Mr. Sharma's inherited shares, which of the following would NOT be a valid reason for the R&T agent to reject his Dematerialisation Request Form (DRF)?

AThe physical certificates have a mismatch in information compared to the DRF.

BThe signature of Mr. Sharma on the DRF does not tally with the records of the R&T agent.

CThe securities are units of a mutual fund held in Statement of Accounts.

DThe inherited shares are in his grandfather's name, while the demat account is in Mr. Sharma's name.

Medium Sub-question 4

Mr. Sharma wishes to grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, from Dubai. Which of the following combinations of requirements is essential for the PoA to be considered valid for financial transactions in India?

ATyped on plain paper, attested by a designated official of the Indian embassy abroad, signed by grantor on all pages, signed by holder on last page, and notarized in India if required.

BTyped on non-judicial stamp paper, signed by grantor on all pages, signed by holder on last page, and notarized in Dubai.

CTyped on plain paper, signed by grantor only, and submitted directly to the investment adviser.

DTyped on non-judicial stamp paper, attested by a notary abroad, signed by grantor and holder on all pages, and no further notarization required.

Easy Sub-question 5

What is the initial step Mr. Sharma needs to take to convert his inherited physical share certificates of 'BrightFuture Ltd.' into electronic (dematerialised) form?

ADirectly send the certificates to the Depository (NSDL/CDSL).

BSubmit the physical certificates along with a Dematerialisation Request Form (DRF) to his Depository Participant (DP).

CSend the certificates to the Registrar and Transfer (R&T) agent of BrightFuture Ltd.

DContact SEBI for approval to convert physical shares.

Case 4 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajiv Sharma, a 55-year-old Indian citizen, has been residing in the USA for the past 20 years, working as a software engineer. He visits India annually for about 45 days to meet his family. Recently, he decided to consolidate his Indian investments and manage them more efficiently. He holds some old physical share certificates of XYZ Ltd. (issued in 1998, face value Rs. 10 each) and also wants to invest in a new public issue of ABC Corp. Ltd. which is expected to be over Rs. 15 crores. Due to his frequent international travel and busy schedule, Mr. Sharma wishes to appoint his younger brother, Mr. Alok Sharma, who lives in Mumbai, to handle his investment transactions in India. Mr. Alok Sharma is 48 years old and has a good understanding of the Indian financial markets. Mr. Rajiv Sharma also has some savings in an NRO account from rental income in India, which he wishes to invest, alongside funds he plans to remit from his foreign currency earnings in the USA. He is particularly interested in ensuring the investment proceeds from his foreign remittances are easily repatriable.

Medium Sub-question 1

Mr. Rajiv Sharma grants a Power of Attorney (PoA) to his brother, Mr. Alok Sharma, to manage his investments. Which of the following actions can Mr. Alok Sharma, as the PoA holder, *NOT* undertake on behalf of Mr. Rajiv Sharma?

APurchase mutual fund units and make payments for them.

BSell existing shares and settle transactions.

COpen a new demat account for Mr. Rajiv Sharma.

DRedeem investment units and receive proceeds.

Hard Sub-question 2

Mr. Rajiv Sharma wants to dematerialise his old physical share certificates of XYZ Ltd. Describe the correct sequence of key steps involved in this process, highlighting the interaction between the investor, DP, and R&T agent.

AInvestor submits DRF and physical certificates to DP → DP sends electronic request to R&T agent and depository, and physical documents to R&T agent → R&T agent verifies and mutilates certificates, updates Register of Members, confirms to depository → Investor's demat account is credited.

BInvestor sends physical certificates directly to the R&T agent → R&T agent verifies and credits investor's demat account → Investor informs DP to update records.

CInvestor submits DRF to DP → DP sends electronic request to depository → Depository directly converts to electronic form and informs investor.

DR&T agent contacts investor to collect physical certificates → R&T agent dematerialises them → Investor then opens a demat account.

Medium Sub-question 3

Mr. Rajiv Sharma plans to invest funds from two sources: rental income from his NRO account (Indian Rupees) and remittances from his foreign currency earnings in the USA. Regarding the repatriation of investment proceeds, which statement is accurate?

AProceeds from both sources will be freely repatriable as long as they are invested in the same portfolio.

BProceeds from the NRO account investment will be repatriable, while foreign currency remittances will be non-repatriable.

CProceeds from the foreign currency remittances will be repatriable, while NRO account investment proceeds will be non-repatriable.

DRepatriation depends on the type of security invested in, not the source of funds.

Easy Sub-question 4

Based on the provided details, what is Mr. Rajiv Sharma's residential status as per the Income Tax Act for the current financial year?

AResident and Ordinarily Resident (ROR)

BResident but Not Ordinarily Resident (RNOR)

CNon-Resident Indian (NRI)

DDeemed Resident

Easy Sub-question 5

Mr. Rajiv Sharma wants to invest in the upcoming public issue of ABC Corp. Ltd., which is expected to be over Rs. 15 crores. What form will the units of this public issue be issued in, as per SEBI regulations?

APhysical form only, with a physical certificate.

BDematerialised form only.

CEither physical or dematerialised form, as per investor's choice.

DInitially physical, then convertible to dematerialised form.

Case 5 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajesh Kumar, a 48-year-old Indian citizen, has been living and working in Dubai for the past 10 years. He visits India annually for about 45-50 days. He holds a significant investment portfolio in India, which includes some ancestral shares of a listed company, acquired in physical certificate form in 1998, and also units of several mutual funds, some of which he holds in physical Statement of Account form. He wishes to streamline his holdings and enable easier management of his investments. Recently, Mr. Kumar decided to dematerialise his physical share certificates and also convert his mutual fund units into demat form. He approached a Depository Participant (DP) in India to initiate this process. Additionally, recognizing the challenges of managing investments from abroad, he is considering granting a Power of Attorney (PoA) to his younger sister, Ms. Priya Sharma, who resides in Mumbai, to handle his financial transactions in India. He wants to ensure that the PoA is legally valid and covers the necessary aspects of investment management, while also understanding the limitations of such an arrangement.

Easy Sub-question 1

What is the primary purpose of dematerialisation of securities, as Mr. Rajesh Kumar intends to do with his physical shares and mutual fund units, according to the provided chapter text?

ATo convert physical securities into electronic form for easier holding and transaction.

BTo eliminate the need for an International Securities Identification Number (ISIN).

CTo make securities non-fungible and unique to each investor.

DTo increase the stamp duty payable on security transfers.

Hard Sub-question 2

Mr. Kumar successfully dematerialised his physical shares. Subsequently, he plans to convert his mutual fund units into demat form. How would these dematerialised shares and mutual fund units be uniquely identified in the depository system, and what specific characteristic applies to these dematerialised holdings?

AThey are identified by their original physical certificate numbers and are considered non-fungible.

BThey are identified by their International Securities Identification Number (ISIN) and the number of shares/units held, and they are fungible.

CThey are identified by distinct folio numbers within the Register of Members and they retain unique identities.

DThey are identified by the Depository Participant (DP) ID and client account number, and they are non-fungible.

Medium Sub-question 3

During the dematerialisation process of Mr. Kumar's physical share certificates, which entity is primarily responsible for verifying that the Dematerialisation Request Form (DRF) has the DP’s authorization and that the DRN in the physical documents matches the electronic request?

AThe Depository Participant (DP)

BThe Depository (NSDL or CDSL)

CThe Issuer or its Registrar and Share Transfer (R&T) agent

DThe Securities and Exchange Board of India (SEBI)

Medium Sub-question 4

Based on the information provided about Mr. Rajesh Kumar's stay in India and the chapter text on non-resident status, what is his likely residential status for income tax purposes in India for the current financial year?

AResident and Ordinarily Resident

BResident but Not Ordinarily Resident

CNon-Resident

DDeemed Resident

Easy Sub-question 5

If Mr. Rajesh Kumar grants a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, to manage his investments, which of the following actions is explicitly stated in the chapter text as NOT allowed for a PoA holder?

APurchasing new securities on behalf of the grantor.

BSettling transactions for the grantor.

CMaking or changing nominations for the investment.

DMaking initial investments in mutual funds.

About this content: These practice questions are based on the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination Workbook published by the National Institute of Securities Markets (NISM), Mumbai. NISM is a SEBI-established institution. Questions cover Operational Aspects of Investment Management with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI. Last updated: July 08, 2026.

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