📊 NISM Series XVChapter 9 of 15⚖ 5 marks weightageCase-Based ✓
Ch.9: Corporate Actions
Practice questions for NISM-Series-XV: Research Analyst Certification Examination
(mandated by SEBI under the Research Analysts Regulations, 2014).
Chapter 9 carries 5 out of 100 marks
in the final examination. The exam has 80 MCQs + 5 case-based sets, 120-minute duration,
60% passing score, and −0.25 negative marking per wrong answer.
Know the impact of corporate actions on share price and shareholder value
Understand delisting, open offers and SEBI takeover regulations
Key Terms:dividendbonus sharesrights issuestock splitbuybackdelistingopen offerrecord date
Multiple Choice Questions (30)
Q1MCQMediumRights Issue Purpose
What is the primary reason for a company to offer a rights issue to its existing shareholders when raising additional equity capital?
ATo increase the company's market capitalization quickly.
✓To prevent the dilution of proportionate holding of existing shareholders.
CTo allow new investors to gain significant control in the company.
DTo reduce the company's debt burden without issuing new shares.
💡 The text states, 'To prevent this [dilution of holdings], Companies Act requires that a company which wants to raise more capital through an issue of shares must first offer them to the existing shareholders and such an offer of shares is called a rights issue.'
Q2MCQMediumCorporate Actions Eligibility
For investors holding dematerialized shares, whose names must appear in the register for them to be eligible for corporate benefits?
AThe company's board of directors
✓The depository's register of beneficial owners
CThe Registrar and Share Transfer Agent
DThe stock exchange's trading members list
💡 The text states that for dematerialized shares, eligibility is determined by investors whose names appear in the register of beneficial owners maintained by the depository.
Q3MCQEasyDividend Payment Timeline
According to the provided text, within how many days must a company pay dividends after its declaration?
A15 days
✓30 days
C45 days
D60 days
💡 The text states, 'A company has to pay dividends within 30 days of its declaration.'
Q4MCQEasyCorporate Action Regulations
Which of the following bodies/agreements regulates corporate actions in a company that has made a public issue of shares?
AProvisions of the Companies Act, 2013
BRelevant regulations of SEBI
CTerms of the listing agreement entered into with the stock exchange
✓All of the above
💡 The text explicitly states that corporate actions are regulated by provisions of the Companies Act, 2013, relevant regulations of SEBI, and terms of the listing agreement.
Q5MCQMediumBonus Issue Source
From which source are bonus shares allowed to be issued by a company?
AReserves built from revaluation of assets
✓Free reserves built from genuine profits
CBorrowed funds from financial institutions
DProceeds from a new public offer
💡 The text states, 'The company makes the bonus issue out of its free reserves built from genuine profits. Reserves built from revaluation of assets are not allowed to be considered for making a bonus issue.'
Q6MCQEasyShare Consolidation
Share consolidation is described as the reverse of which other corporate action?
ABonus Issue
BRights Issue
✓Stock Split
DShare Swap
💡 The text clearly states, 'Share consolidation is the reverse of stock split.'
Q7MCQEasyRights Issue Purpose
What is the primary reason the Companies Act requires a company to first offer new shares to existing shareholders when raising more capital through an issue of shares?
ATo ensure higher subscription rates for the new issue.
✓To prevent dilution of existing shareholders' proportionate holdings.
CTo reduce the administrative costs of issuing shares.
DTo comply with international investment regulations.
💡 The text states that the Companies Act requires offering shares to existing shareholders 'To prevent this [dilution of holdings]'.
Q8MCQMediumPayout Ratio
How is the Payout ratio, which indicates a company's historical dividend track record, calculated?
ADividing the company's total dividend by its net profit.
✓Dividing the company's dividend per share by its earnings per share.
CDividing the company's market price per share by its book value per share.
DDividing the company's total earnings by its total outstanding shares.
💡 The text defines it as, 'Payout ratio, which is calculated by dividing the company's dividend per share by earnings per share.'
Q9MCQEasyStock Split Definition
What is the primary characteristic of a stock split?
AAn increase in the face value of existing shares.
✓A reduction in the face value of existing shares.
CThe issuance of new shares for consideration.
DThe buyback of existing shares from the market.
💡 The text defines a stock split as 'a corporate action where the face value of the existing shares is reduced in a defined ratio.'
Q10MCQMediumRights Issue Purpose
What is the primary reason the Companies Act requires a company to offer new shares first to existing shareholders when raising additional capital?
ATo ensure a higher premium on the issue price.
✓To protect the proportionate holding of existing shareholders from dilution.
CTo reduce the regulatory burden on the company.
DTo attract new foreign institutional investors.
💡 To prevent dilution of holdings, the Companies Act requires that a company which wants to raise more capital through an issue of shares must first offer them to the existing shareholders.
Q11MCQHardBonus Issue Restrictions
Under which of the following conditions is a company explicitly prohibited from making a bonus issue?
✓If it has defaulted on payment of interest on any debt security.
BIf it has declared an interim dividend in the same financial year.
CIf its share price is trading below its face value.
DIf it has recently undertaken a stock split.
💡 The text states, 'A company cannot make bonus issue if it has defaulted on payment of interest and/or principal on any debt security issued or any fixed deposit raised.'
Q12MCQHardStock Split Calculation
An investor holds 100 shares of a company with a face value of Rs. 10 each. If the company announces a stock split in the ratio of 1:5, what will be the investor's new number of shares and the face value per share?
A20 shares with a face value of Rs. 50.
✓500 shares with a face value of Rs. 2.
C100 shares with a face value of Rs. 2.
D500 shares with a face value of Rs. 10.
💡 A 1:5 stock split means each existing share becomes 5 shares, so 100 shares * 5 = 500 shares. The face value will be reduced to 1/5th of the original, so Rs. 10 / 5 = Rs. 2.
Q13MCQEasyDividend Declaration
According to SEBI mandate, how shall listed companies declare dividends to avoid confusion among investors?
AAs a percentage of the face value
✓In rupees terms on per share basis
CAs a percentage of the market value
DAs a fixed amount per shareholder
💡 The text specifies, 'SEBI has mandated that listed companies shall declare dividends (if any) in rupees terms on per share basis as against the earlier practice of declaring dividends as a percentage of the face value.'
Q14MCQHardBonus Issue Restrictions
Under which of the following conditions is a company explicitly NOT allowed to make a bonus issue, as stated in the text?
AIf the company has declared a final dividend in the same financial year.
BIf the company's Payout ratio is below 50%.
✓If the company has defaulted on payment of interest on any debt security.
DIf the company has issued a rights issue in the preceding six months.
💡 The text states, 'A company cannot make bonus issue if it has defaulted on payment of interest and/or principal on any debt security issued or any fixed deposit raised.'
Q15MCQMediumDividend Declaration Mandate
As per SEBI's mandate mentioned in the text, how are listed companies now required to declare dividends?
AAs a percentage of the market value.
✓In rupees terms on a per share basis.
CAs a percentage of the book value.
DAs a percentage of the face value.
💡 The text states, 'SEBI has mandated that listed companies shall declare dividends (if any) in rupees terms on per share basis as against the earlier practice of declaring dividends as a percentage of the face value.'
An investor holds shares in Company A (Face Value Rs. 2, declared 50% dividend) and Company B (Face Value Rs. 10, declared 50% dividend). Assuming the earlier practice of declaring dividends as a percentage of face value, how much dividend would the investor receive per share from each company?
✓Company A: Re. 1, Company B: Rs. 5
BCompany A: Rs. 5, Company B: Re. 1
CCompany A: Re. 1, Company B: Re. 1
DCompany A: Rs. 5, Company B: Rs. 5
💡 As per the example in the text, if 50% dividend is declared by two companies 'A' and 'B' with different face values of Rs.2 and Rs.10 respectively, an investor in company 'A' will receive Re. 1 (50% of Rs. 2) as dividend as against Rs. 5 (50% of Rs. 10) in the case of company 'B'.
Q17MCQMediumStock Split Impact
How does a stock split generally impact the per share data (e.g., earnings per share, book value per share) immediately after the action?
AIt causes an immediate improvement.
✓It causes an immediate deterioration.
CIt has no immediate impact.
DIt depends on market demand and supply.
💡 The text mentions for stock splits, 'As the total number of shares go up without any economic change in the Profit and Loss statement or Balance Sheet, per share data (earning per share, book value per share, market price per share etc.) witnesses immediate deterioration.'
Q18MCQMediumRights Issue Duration
What is the minimum and maximum period for which a rights issue must remain open for subscription?
AMinimum 7 days, Maximum 15 days
BMinimum 10 days, Maximum 20 days
✓Minimum 15 days, Maximum 30 days
DMinimum 30 days, Maximum 45 days
💡 A rights issue is open for subscription for a minimum period of 15 days and a maximum period of 30 days.
Q19MCQEasyDividend Payment
A company is required to pay dividends within how many days of its declaration?
A15 days
✓30 days
C45 days
D60 days
💡 The text states, 'A company has to pay dividends within 30 days of its declaration.'
Q20MCQMediumBonus Issue Reserves
Which type of reserves are explicitly NOT allowed to be considered for making a bonus issue?
AFree reserves built from genuine profits.
✓Reserves built from revaluation of assets.
CGeneral reserves.
DCapital reserves from share premium.
💡 The text clearly states, 'Reserves built from revaluation of assets are not allowed to be considered for making a bonus issue.'
Q21MCQEasyCorporate Actions Philosophy
Which of the following is NOT listed as a regulation governing corporate actions?
AProvisions of the Companies Act, 2013
BRelevant regulations of SEBI
✓Guidelines from the Reserve Bank of India (RBI)
DTerms of the listing agreement entered into with the stock exchange
💡 The text explicitly lists Provisions of the Companies Act, 2013, Relevant regulations of SEBI, and Terms of the listing agreement as regulations governing corporate actions. RBI guidelines are not mentioned in this context.
Q22MCQHardRights Issue Timeline
What is the minimum and maximum period for which a rights issue must remain open for subscription?
AMinimum 7 days and maximum 15 days
✓Minimum 15 days and maximum 30 days
CMinimum 30 days and maximum 45 days
DMinimum 10 days and maximum 21 days
💡 The text specifies, 'A rights issue is open for subscription for a minimum period of 15 days and a maximum period of 30 days.'
Q23MCQMediumDividend Payment
What is the maximum time period allowed for a company to pay dividends after its declaration?
A15 days
✓30 days
C45 days
D60 days
💡 A company has to pay dividends within 30 days of its declaration.
Q24MCQEasyDividend Declaration
According to SEBI's mandate for listed companies, how must dividends be declared to avoid confusion among investors?
AAs a percentage of the company's total profit.
✓In rupees terms on a per share basis.
CAs a percentage of the share's market value.
DAs a fixed amount for all shareholders regardless of shareholding.
💡 SEBI has mandated that listed companies shall declare dividends (if any) in rupees terms on per share basis as against the earlier practice of declaring dividends as a percentage of the face value.
Q25MCQEasyBonus Issue Definition
What is another name for a bonus issue?
ARights dividend
✓Equity dividend
CCash dividend
DSpecial dividend
💡 A bonus issue, also known as equity dividend, is an alternative to cash dividend.
Q26MCQMediumBonus Issue Impact on Holding Value
What is the immediate economic impact of a bonus issue on the total value of a shareholder's holdings?
AThe total value of holdings increases significantly.
BThe total value of holdings decreases due to dilution.
✓The total value of holdings remains unchanged.
DThe total value of holdings becomes zero.
💡 The text states, 'The shareholders do not pay anything for these shares and there is no change in the value of their holdings in the pre and post-bonus stages.'
Q27MCQEasyCorporate Actions Regulations
Which of the following is NOT a primary regulation governing corporate actions for a company that has made a public issue of shares, as per the text?
AProvisions of the Companies Act, 2013
BRelevant regulations of SEBI
CTerms of the listing agreement entered into with the stock exchange
✓Guidelines from the Ministry of Finance
💡 The text explicitly lists the Companies Act, SEBI regulations, and terms of the listing agreement as governing corporate actions, but not guidelines from the Ministry of Finance.
Q28MCQHardBonus Issue Restrictions
Which of the following statements about bonus issues is FALSE?
ABonus shares are issued without any consideration from shareholders.
✓A company can make a bonus issue from reserves built from revaluation of assets.
CThe issuance of bonus shares is termed as capitalization of reserves.
DAfter a bonus issue, per share data like EPS and market price per share typically deteriorates.
💡 The text explicitly states: 'Reserves built from revaluation of assets are not allowed to be considered for making a bonus issue.'
Q29MCQMediumRights Issue Subscription Period
What is the minimum and maximum period for which a rights issue must be open for subscription?
AMinimum 7 days and maximum 15 days.
BMinimum 10 days and maximum 21 days.
✓Minimum 15 days and maximum 30 days.
DMinimum 21 days and maximum 45 days.
💡 The text specifies, 'A rights issue is open for subscription for a minimum period of 15 days and a maximum period of 30 days.'
Q30MCQEasyStock Split Impact
From a company's perspective, what is the immediate effect on its share capital after a stock split?
AIts share capital increases due to more outstanding shares.
BIts share capital decreases due to a fall in face value.
✓There is no change in its share capital.
DIts share capital is converted into reserves.
💡 From the company’s perspective, there is no change in its share capital since an increase in the number of shares is offset by a fall in the face value and resultant multiplier of face value and outstanding no. of shares remains the same.
Case-Based Questions (1 sets)
Case 1Case-BasedCorporate Actions: Dividends, Rights Issue, Stock Split, Bonus Issue
TechInnovate Ltd., a fast-growing technology company, recently concluded a successful financial year, generating substantial profits. To reward its loyal shareholders and manage its capital structure, the Board of Directors announced a series of corporate actions. First, they declared an interim dividend of Rs. 3 per share. Shortly after, to fund its ambitious expansion plans without diluting existing shareholder control, the company decided to offer new shares to its current investors. Following this, the board, aiming to improve the stock's liquidity and make it more accessible to retail investors after a significant run-up in its market price (currently Rs. 2500), approved a measure to reduce its per-share price. Finally, acknowledging the high reserves accumulated and to capitalize on them, the company decided to issue additional shares to its shareholders without any cash consideration. These actions were communicated through official channels, setting specific record dates for each.
Medium Sub-question 1
Regarding TechInnovate Ltd.'s declared interim dividend of Rs. 3 per share, which of the following statements is most accurate as per current SEBI regulations for listed companies?
✓The dividend declaration in Rupee terms per share is a mandatory practice mandated by SEBI to avoid investor confusion.
BThe company could have optionally declared the dividend as a percentage of its face value, e.g., 30% on a Rs. 10 face value share.
CShareholders will receive the dividend net of 10% TDS only if their annual dividend income from TechInnovate Ltd. exceeds Rs. 10,000.
DTechInnovate Ltd. is required to pay Dividend Distribution Tax (DDT) on this interim dividend.
💡 SEBI has mandated that listed companies declare dividends in rupees terms on a per share basis, not as a percentage of face value, to avoid confusion. TDS of 10% is deducted on dividend income exceeding Rs. 5000, not Rs. 10,000. DDT has been abolished for domestic companies since Assessment Year 2021-22.
Hard Sub-question 2
To fund its expansion plans without diluting existing shareholder control, TechInnovate Ltd. decided to offer new shares to its current investors. Which of the following best describes this corporate action and its associated shareholder right?
AThis is a Bonus Issue, where existing shareholders must subscribe to maintain their proportionate ownership.
✓This is a Rights Issue, and existing shareholders have the option to renounce their entitlement to another person.
CThis is a Preferential Allotment, primarily aimed at institutional investors to raise capital quickly.
DThis is a Public Issue, requiring existing shareholders to apply through an IPO process.
💡 Offering new shares primarily to existing shareholders to prevent dilution of their holdings is a Rights Issue. Shareholders have the choice to subscribe, let it expire, or renounce their rights by selling or transferring them.
Medium Sub-question 3
TechInnovate Ltd. decided to issue additional shares to its shareholders without any cash consideration by capitalizing on accumulated reserves. What is this corporate action called, and what is its primary source?
AIt is a Rights Issue, funded by fresh capital from existing shareholders.
BIt is a Stock Split, funded by reducing the face value of existing shares.
✓It is a Bonus Issue, funded by transferring free reserves to paid-up capital.
DIt is a Share Consolidation, funded by increasing the face value of existing shares.
💡 Issuing additional shares to existing shareholders without consideration, by capitalizing reserves, is a Bonus Issue. The reserves from genuine profits are transferred to paid-up capital. Reserves built from revaluation of assets are not allowed for bonus issues.
Easy Sub-question 4
TechInnovate Ltd. approved a measure to reduce its per-share price from Rs. 2500 and improve liquidity. If the company's shares, currently with a face value of Rs. 10, undergo a 1:5 stock split, what would be the immediate effect on an investor holding 100 shares?
AThe investor will hold 20 shares, each with a face value of Rs. 50.
✓The investor will hold 500 shares, each with a face value of Rs. 2.
CThe total market value of the investor's holding will immediately increase by 5 times.
DThe company's total paid-up capital will increase fivefold.
💡 A 1:5 stock split means each existing share splits into 5 shares. So, 100 shares become 500 shares. The face value reduces proportionally, from Rs. 10 to Rs. 10/5 = Rs. 2. The total market value and paid-up capital remain unchanged immediately after a split.
About this content: These practice questions are based on the
NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026)
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Corporate Actions with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
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