NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents-Corporate Certification Examination

NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents-Corporate Examination Question Paper

Syllabus for RTA Corporate Exam

Unit 1: Introduction to Securities

• 1.1. Describe the broad categorization of securities as equity and debt and distinguish between equity and debt capital based on:
• • 1.1.1. Contributors of fund
  • 1.1.2. Time period
  • 1.1.3 Cost of capital
  • 1.1.4 Rights of the contributors
• 1.2 Describe the features of equity capital and benefits to equity investors

• 1.2.1 Limited liability
• 1.2.2 Ownership rights
• 1.2.3 Liquidity
• 1.2.4 Perpetuity
• 1.2 .5 Uncertain pay-outs

• 1.3 Describe the features of debt capital and benefits to debt investors
• 1.4 Describe hybrid structures
• • 1.4.1 Convertible debentures
• 1.5 Preference shares

Unit 2: Characteristics of Equity Shares

• 2.1 List the types of investors in Equity Shares:
• • 2.1.1 Promoters
  • 2.1.2 Institutional Investors
  • 2.1.3 Public Investors
• 2.2 Understand the rights of common shareholders
• • 2.2.1 Ownership rights
  • 2.2.2 Right to dividend
  • 2.2.3 Ownership transfer rights
  • 2.2.4 Other rights (right to inspect documents, right to legal recourse etc)
• 2.3 List the risks involved in equity investing
• • 2.3.1 No fixed return
  • 2.3.2 No fixed tenor
  • 2.3.3 Liquidity risk
  • 2.3.4 No collateral security
• 2.4 Describe the various equity terminologies–face value, share premium, authorized capital, issued capital, paid-up capital, outstanding shares, fully paid-up shares, partly paid-up shares
• 2.5 Describe the various corporate actions
• • 2.5.1 Dividend
  • 2.5.2 Buyback of shares
  • 2.5.3 Bonus issue
  • 2.5.4 Stock split and Consolidation.
• 2.6 Discuss reduction of Share Capital through extinguishment of shares or through forfeiture of shares
• 2.7 Discuss Preference shares
• 2.8 Discuss Rights Issue of shares
• 2.9 Discuss briefly Preferential Issue

Unit 3: Characteristics of Debt Securities

• 3.1 Define the features of debt security in terms of payments such as the face value, coupon and term to maturity.
• 3.2 Distinguish the market value of corporate debt security from the face value.
• 3.3 Define current yield and yield to maturity
• 3.4 List the types of debt securities and describe their characteristics:
• • 3.4.1 Convertible debt securities
  • 3.4.2 Zero-coupon bond
  • 3.4.3 Fixed-rate bonds
  • 3.4.4 Floating rate bonds
  • 3.4.5 Inflation-indexed bonds
  • 3.4.6 Amortising bonds
  • 3.4.7 Asset-backed securities
  • 3.4.8 Other types of bonds (deferred interest bonds, step-up bonds)
• 3.5 List out the classification of the Debt market
• • 3.5.1 Based on the type of borrower
  • 3.5.2 Based on the tenor of the instrument
• 3.6 Know about Credit Rating and identify the role of Credit Rating Agencies and their symbols
• • 3.6.1 Describe the nature of unrated bonds
• 3.7 Understand Money market instruments like Commercial Paper, Certificate of Deposit and Treasury Bills)

Unit 4: Characteristics of Other Securities

• 4.1 Identify the purpose of a warrant offering as a means to make an offering of new securities, usually debt securities, more attractive to investors
• 4.2 Identify the purpose of convertible debentures, to convert debt to equity over time, and manage cash flows
• 4.3 Identify the purpose of Depository Receipts (DRs)
• 4.4 Identify the purpose of Foreign Currency Convertible Bonds (FCCBs)
• 4.5 Discuss briefly the Exchange-Traded Funds (ETFs) and Index Funds
• 4.6 Compare and contrast between Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)
• 4.7 Discuss briefly Alternate Investment Funds (AIFs)
• 4.8 Discuss briefly Corporate Fixed Deposits

Unit 5: Basics of Mutual Funds

• 5.1 Understand the concept of Mutual Funds
• • 5.1.1 Identify investment objective of a fund and associate it with the portfolio
  • 5.1.2 Describe the following concepts with illustrations:
  • • 5.1.2.1 Collective Investment Vehicle
    • 5.1.2.2 Proportionate share of benefits
    • 5.1.2.3 Units of a Mutual Fund
    • 5.1.2.4 Unit Capital of a Mutual Fund scheme
• 5.2 Understand and list the benefits of mutual funds to investors
• 5.3 Describe and distinguish between open-end and closed-end mutual funds
• 5.4 Define Assets under Management (AUM) of a mutual fund portfolio and illustrate with an example
• 5.5 Define and describe Net Asset Value (NAV) of a fund
• • 5.5.1 Discuss the assets and liabilities in a mutual fund portfolio to calculate NAV of the fund

Unit 6: SEBI – Role and Regulations

• 6.1 Understand the securities market regulatory environment
• 6.2 Understand the role of Securities and Exchange Board of India (SEBI) and importance of SEBI Act, 1992
• 6.3 Name SEBI regulations specifically aimed at investor protection:
• • 6.3.1 SEBI (Prohibition of Insider Trading) Regulations, 2015
  • 6.3.2 SEBI (Prohibition of Fraudulent and Unfair Trade practices relating to Securities Market) Regulations, 2003
• 6.4 Understand the role of Investor Education and Protection Fund Authority
• • 6.4.1 Identify the purpose of the Investor Education and Protection Fund (IEPF)
  • 6.4.2 Highlight the key aspects of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016
• 6.5 Know other SEBI Regulations and Circulars:
• • 6.5.1 SEBI (Registrars to an Issue and Share Transfer Agents) Regulation, 1993
  • • 6.5.1.1 Obligation and Responsibilities
    • 6.5.1.2 Inspection of RTA operations
    • 6.5.1.3 Cancellation or Suspension of Certificate of Registration
  • 6.5.2 SEBI circular on Strengthening the Guidelines and Raising Industry standards for RTA, Issuer Companies and Banker to an Issue
  • 6.5.3 SEBI (Intermediaries) Regulations, 2008
  • 6.5.4 SEBI (Depositories and Participants) Regulations, 2018

Unit 7: Public Offer of Securities

• 7.1 Outline the different types of equity capital issuance by companies
• 7.2 Describe a public offer of shares
• 7.3 Outline the reservation of shares to certain categories of investors
• 7.4 Discuss an Initial Public Offer (IPO)
• 7.5 State the eligibility norms for public issue of shares
• 7.6 Discuss the Follow-on Public Offer (FPO)
• 7.7 Discuss buyback of securities
• • 7.7.1 Outline the regulatory requirements for buyback offer as laid down in SEBI (Buy-Back of Securities) Regulations, 2018
  • 7.7.2 Discuss different ways to buyback of securities by companies:
  • • Buy Back through a Tender Offer
    • Buy Back through Stock Exchanges
    • Buy Back through a Book Building Process

Unit 8: Modes of allotment of shares other than Public Offers

• 8.1 Know about the private placement of shares
• 8.2 Discuss Qualified Institutions Placements (QIP) of securities
• 8.3 Discuss the Rights Issues
• 8.4 Discuss Employee Stock Options (ESOPs)
• 8.5 Briefly discuss the conversion of Convertible Debentures/Bonds into shares

Unit 9: Processes related to Public Offering of Shares

• 9.1 Outline the different activities performed by Lead Managers in a public offer of shares
• • 9.1.1 Pre-issue work
  • 9.1.2 Post-issue work
• 9.2 List the categories of investors who participate in a public issue and their prescribed allotment limits
• 9.3 Describe the role and importance of Prospectus in a public offer of shares
• 9.4 Discuss the Red Herring Prospectus
• 9.5 Define underwriting and the role of underwriters
• 9.6 Define Green Shoe Option and explain the process
• 9.7 Discuss different methods of making a public issue of shares
• • 9.7.1 Define Fixed Price Issue
  • 9.7.2 Define Book Built Issue
  • • Regulatory requirements in a Book Building Offer
• 9.8 Discuss the SME IPOs and the difference between SME and Main Board IPO
• • 9.8.1 List the capital requirements for SME IPOs
  • 9.8.2 Outline the regulatory requirements for SME IPO

Unit 10: Roles and Responsibilities in a Public Issue

• 10.1 Discuss the different activities performed by Registrar and Transfer Agents (R&T Agents) in a public offer of shares
• • 10.1.1 Pre-Issue Work
  • 10.1.2 Post-Issue Work
• 10.2 Define Application Supported by Blocked Amount (ASBA) facility
• • 10.2.1 Discuss the process involved for availing the ASBA facility to subscribe to public issue of shares
  • 10.2.2 Describe the role and responsibilities of Registrar and Transfer Agents in the ASBA process
• 10.3 List the functions performed by Brokers to the Issue/ Syndicate Members/ Designated Intermediaries
• • 10.3.1 Describe the brief Process of approval for basis of allotment
• 10.4 Describe the UPI payment process for an IPO and other Issues

Unit 11: Depository Services

• 11.1 Explain the concept of dematerialisation of securities
• 11.2 List the constituents of the Depository System
• • 11.2.1 Discuss the roles and responsibilities of the constituents:
  • • Depository
    • Issuer/ Registrar and Transfer Agents
    • Depository Participants
    • Designated Depository Participants
• 11.3 Describe the investors’ interface with the Depositories
• • 11.3.2 Identify the rights of investors as Beneficial Owners

Unit 12: Processes related to Depositories

• 12.1 Explain the steps involved in dematerialisation of securities
• 12.2 Explain the steps involved in rematerialisation of securities
• 12.3 Define the concepts of Trading and Settlement
• • 12.3.1 Differentiate between market and off-market trades
  • 12.3.2 Highlight the importance of inter-Depository delivery
• 12.4 Discuss the requirement of Beneficial Owner Reporting by the depositories for updation of records to determine entitlement to corporate actions
• 12.5 Explain the role of Registrar and Transfer Agents in updating the investor records and effecting various corporate actions:
• • 12.5.1 Bonus Issue/ Split/ Consolidation
  • 12.5.2 Rights Issue
  • 12.5.3 Mergers and Amalgamations
• 12.6 Describe the process of reconciliation of records between the Depository and Registrar & Transfer Agents
• 12.7 Briefly explain the importance of maintaining a database of Distinctive Numbers of equity shares of a listed company by the Depositories
• 12.8 Discuss the procedure of crediting the shares to IEPF account and servicing the claim of the investors

Unit 13: Investor Interface with the R&T Agent

• 13.1 Describe the process related to Transfer of physical shares for listed entities (w.e.f April 1, 2019; including the process of transfer of unlisted shares
• 13.2 Discuss the steps followed by RTAs in Recording changes in the investor information
• • 13.2.1 Change in address
  • 13.2.2 Change in bank details
  • 13.2.3 Registering a Power of Attorney
  • 13.2.4 Registering Nomination Form
  • 13.2.5 Registration of FORM 15H and 15G for dividend processing as per changes in Finance Bill 2020.
• 13.3 Discuss the steps involved in Issuance of duplicate certificates for securities (including lost shares for both buyer and seller and stolen shares)
• 13.4 Discuss Stop transfer instructions
• 13.5 Describe the process related to Transmission of securities (Normal mode, Physical mode as well for securities which has been credited to the IEPF account)
• 13.6 Explain the role of Registrar and Transfer Agents in facilitating the conduct of the Annual General Meeting
• • 13.6.1 List the advantages of e-voting facilities provided to the shareholders.

Unit 14: Secondary Market Transactions

• 14.1 Identify the role of the secondary market
• 14.2 Identify the role of the stock exchanges as facilities for conducting secondary market transactions
• 14.3 List the various participants in the stock markets and discuss their role
• • 14.3.1 Investors
  • 14.3.2 Intermediaries
  • • Stock Brokers
    • Depository Participants
• 14.4 Discuss the importance of listing of securities in a recognised stock exchange
• 14.5 Know the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding:
• • 14.5.1 Applicability of the Regulations
  • 14.5.2 Common obligations of listed entities
  • 14.5.3 Quarterly and annual compliances
  • 14.5.4 Events requiring prior intimation and intimation within 24 hours of occurrence of event

Unit 15: Client Servicing

• 15.1 Define an Investor in the context of RTA organisation
• • 15.1.1 Discuss the importance of investors in the economy
• 15.2 Discuss the handling of service requests through the First Time Right (FTR) approach
• 15.3 Explain the various principles of client servicing:
• • 15.3.1 Attitude
  • 15.3.2 Patience
  • 15.3.3 Empathy
  • 15.3.4 Compassion
  • 15.3.5 Liaising
  • 15.3.6 Communication skills
• 15.4 Discuss the service etiquettes followed by RTA organisation in client servicing
• • 15.4.1 Outline the basic rules followed as per the Standard Operating Procedures (SOP)
  • 15.4.2 List down the Dos and Don’ts in client servicing
  • 15.4.3 Emphasize the effective resolution of investor grievances
  • 15.4.4 Importance of thanking the investors