Question 10
Divgi TorqTransfer Systems IPO launched in February 2023, focuses on designing and
manufacturing driveline solutions, including transfer cases and transmission systems for the
automotive sector. It caters to both conventional and electric vehicle markets.
Issue Price: ₹560-₹590 per share.
Shares Offered: 1.05 crore shares, raising approximately ₹412 crore through a mix
of fresh issue and offer for sale (OFS).
The IPO was oversubscribed 4.65 times, with strong demand across all categories:
QIBs: Subscribed 7.16 times.
Retail: Subscribed 5.05 times.
NIIs: Subscribed 1.25 times.
Listing Date: March 1, 2023, with the stock debuting at ₹620, 5.08% above the issue
price.
The IPO used the book-building process, with shares allotted proportionally across QIBs,
retail, and NII categories. Post-listing, the stock showed positive momentum, reflecting
investor optimism in the growing demand for driveline systems, particularly in the electric
vehicle space.
Question 9
Case Study on an IPO Allotment Issue – XYZ Ltd.
XYZ Ltd. launched an IPO but later faced scrutiny due to financial misrepresentation, fake
applications to inflate demand, and a subsequent stock price crash, causing investor losses.
Legal Violations:
1. Companies Act, 2013:
o Section 34 & 447: Issuing a misleading prospectus with false statements is a
punishable offense.
o Section 36: Fraudulent inducement to invest is prohibited.
o Section 38: Using fake applications to inflate demand is illegal.
2. SEBI Regulations:
o SEBI (ICDR) Regulations, 2018: Companies must disclose true financials.
o SEBI Act, 1992 – Section 12A & PFUTP Regulations: Fraudulent and unfair
trade practices are banned.
Penalties:
Directors and officers may face fines up to ₹25 crore or three times the profit gained.
Imprisonment of up to 10 years for fraudulent practices.
SEBI can bar promoters from the securities market.
Investor Protection Measures:
Strict due diligence by SEBI before IPO approvals.
Mandatory forensic audits for suspicious IPOs.
Enhanced investor awareness through financial literacy programs.
Stronger penalties for market manipulators to deter fraud.
These measures can ensure transparency and safeguard investor interests.
Question 8
SEBI’s IPO Regulations – Summary
The Securities and Exchange Board of India (SEBI) has established strict guidelines for
Initial Public Offerings (IPOs) to ensure transparency, protect investors, and streamline share
allotment. Here are five key SEBI regulations:
1. Minimum Promoter Contribution (SEBI ICDR Regulations, 2018)
Promoters must hold at least 20% of post-issue capital for three years to ensure
commitment.
Prevents promoters from exiting immediately after listing, protecting investor
confidence.
2. Pricing and Disclosure Norms
Companies must disclose financials, risks, and business plans in the Red Herring
Prospectus (RHP).
Ensures informed decision-making and prevents financial misrepresentation.
3. IPO Application & Allotment Process
Retail investors can bid through the ASBA (Application Supported by Blocked
Amount) process, preventing fund misuse.
Share allotment follows a proportionate basis, reducing unfair advantages.
4. Lock-in Period for Pre-IPO Investors
Pre-IPO investors must retain their shares for 6-12 months, preventing stock dumping
and volatility.
5. Market Surveillance & Fraud Prevention
SEBI monitors trading patterns post-listing to detect price manipulation or fake
demand creation.
How These Rules Protect Investors
Ensures fair pricing and transparency in IPOs.
Prevents manipulation and fraud by promoters and pre-IPO investors.
ASBA system safeguards investor funds until share allotment.
By enforcing these regulations, SEBI ensures a fair and stable IPO process, promoting
investor trust in the capital markets.
Question 7
Question 6
Board Resolution for Share Forfeiture
LMN Ltd.
(CIN: [Company Identification Number])
Registered Office: [Company Address]
Board Resolution Passed at the Meeting of the Board of Directors
Held on [Date] at [Time] at the Registered Office
Resolution No.: [Resolution Number]
Subject: Approval of Share Forfeiture
"RESOLVED THAT pursuant to the Articles of Association of the Company and Section 50
of the Companies Act, 2013, the Board of Directors hereby approves the forfeiture of
[Number] equity shares held by [Shareholder’s Name], bearing Folio No. [Folio Number],
due to non-payment of the call money of ₹[Unpaid Amount] per share, despite repeated
reminders.
FURTHER RESOLVED THAT the said shares shall be reclassified as forfeited shares and
may be reissued or disposed of at the discretion of the Board as per applicable laws.
FURTHER RESOLVED THAT the Company Secretary be authorized to update the Share
Forfeiture Register and notify the concerned shareholder accordingly.”
Certified True Copy
For LMN Ltd.
[Authorized Signatory]
[Designation]
[Date]
Share Forfeiture Register
S. Shareholder Folio No. of Shares Amount Amount Date of
No. Name No. Forfeited Paid (₹) Unpaid (₹) Forfeiture
[Shareholder’s [Folio [Amount [Amount
1 [No. of Shares] [Date]
Name] No.] Paid] Unpaid]
This ensures regulatory compliance and proper record-keeping. Let me know if you need any
modifications!
Question 5
LMN Ltd.
(CIN: [Company Identification Number])
Registered Office: [Company Address]
Date: [DD/MM/YYYY]
To,
[Shareholder’s Name]
[Address]
[Folio No./DP ID & Client ID]
Subject: Final Call Notice for Unpaid Share Amount
Dear [Shareholder’s Name],
We hope this letter finds you well. This is to inform you that the final call amount of ₹2 per
share for 500 shares (Total: ₹1,000) remains unpaid despite previous reminders.
Payment Details:
Number of Shares: 500
Amount Due: ₹1,000
Due Date: [DD/MM/YYYY]
Payment Mode: [Bank Details / Online Transfer Instructions]
As per the Companies Act, 2013, and the Articles of Association of LMN Ltd., non-
payment of the call money by the due date may lead to:
1. Interest at [X]% per annum on the outstanding amount.
2. Forfeiture of shares, resulting in the loss of ownership rights.
To avoid penalties, please make the payment before the due date. If the payment has already
been made, kindly disregard this notice. For any queries, contact us at [Company
Email/Phone].
Yours sincerely,
[Authorized Signatory]
LMN Ltd.
Question 4
XYZ Ltd.
(CIN: [Company Identification Number])
Registered Office: [Company Address]
Date: [DD/MM/YYYY]
To,
[Shareholder’s Name]
[Address]
[Application No. / DP ID & Client ID]
Subject: Letter of Allotment of Shares
Dear [Shareholder’s Name],
We are pleased to inform you that, pursuant to your application for equity shares in the Initial
Public Offering (IPO) of XYZ Ltd., you have been successfully allotted shares as per the
details below:
Allotment Details:
Number of Shares Allotted: [No. of Shares]
Face Value per Share: ₹[Face Value]
Premium per Share: ₹[Premium Amount]
Total Amount Paid: ₹[Total Amount]
Allotment Date: [DD/MM/YYYY]
Share Certificate Details (For Physical Shares):
Share Certificate No.: [Certificate No.]
Distinctive Numbers: [From – To]
For dematerialized shares, the allotted shares will be credited to your Demat Account [DP
ID & Client ID] within the prescribed timeframe.
If you have any queries or require further assistance, please contact our Registrar &
Transfer Agent (RTA) at [RTA Contact Details] or our Investor Relations team at
[Company Email/Phone].
We thank you for your trust in XYZ Ltd. and look forward to your continued support.
Yours sincerely,
[Authorized Signatory]
XYZ Ltd.
Question 3
Question 2
Question 1
