1. INDIAN CAPITAL MARKET Market of Long-Term Funds. Market of Long-Term Funds. Issue of primary securities in the primary market Issue of primary securities in the primary market Issue of secondary securities in the primary market Issue of secondary securities in the primary market Secondary market transactions in outstanding securities which facilitate liquidity. Secondary market transactions in outstanding securities which facilitate liquidity.

2. Functions of Capital market Disseminate information efficiently Disseminate information efficiently Quick valuation of financial instruments Quick valuation of financial instruments Enabling wider participation Enabling wider participation Developing integration among long term & short term funds, private sector & government sector etc. Developing integration among long term & short term funds, private sector & government sector etc.

3. Primary Capital Market Primary issues of the corporate sector lead to capital formation Primary issues of the corporate sector lead to capital formation Domestic funding through equity & debt instruments Domestic funding through equity & debt instruments External funding of equity through Global Depository Receipts and American Depository Receipts & Debt instruments through External Commercial Borrowings & other ECB through FDI, FII & NRI dEPOSITS External funding of equity through Global Depository Receipts and American Depository Receipts & Debt instruments through External Commercial Borrowings & other ECB through FDI, FII & NRI dEPOSITS

4. Why do companies need to issue shares to the public? What are the different kinds of issues? Initial Public Offering Initial Public Offering Right Issue Right Issue Private Placement Private Placement

5. What is meant by Issue price? What is meant by Market Capitalisation? What is initial public offer? Who decides the price of an issue? the issuer in consultation with the Merchant Banker shall decide the price. other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market forces to determine the final price.

6. Book Building Process Appointment of book Runner (Merchant Banking) Appointment of book Runner (Merchant Banking) Submission of draft to SEBI Submission of draft to SEBI Issuer & book runner decide the offer price Issuer & book runner decide the offer price Offer at different price level from syndicate members. Also deciding about the opening & closing dates for bids Offer at different price level from syndicate members. Also deciding about the opening & closing dates for bids Deciding min. Cut-Off rate Deciding min. Cut-Off rate Final prospectus filed with ROC Final prospectus filed with ROC

7. Placement portion opens for subscription only Placement portion opens for subscription only Public issue portion Public issue portion

8. Cut-Off Price The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called “Cut-Off Price”. What is minimum number of days for which a bid should remain open during book building? How does one know if shares are allotted in an IPO/offer for sale? What is the timeframe for getting refund if shares not allotted?

9. How long does it take to get the shares listed after issue? What is the role of a ‘Registrar’ to an issue? Does NSE provide any facility for IPO?

10. What is a Prospectus? This disclosure includes information like the reason for raising the money, the way money is proposed to be spent, the return expected on the money etc. This information is in the form of ‘Prospectus’ which also includes information regarding the size of the issue, the current status of the company, its equity capital, its current and past performance, the promoters, the project, cost of the project, means of financing, product and capacity etc.

11. What is an ‘Abridged Prospectus’? Who prepares the ‘Prospectus’/‘Offer Documents’? What does ‘Draft Offer document’ mean? What does one mean by ‘Lock-in’?

12. Listing of Securities Admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement also called Listing Agreement   Delisting of securities   What is SEBI’s Role in an Issue?   Does it mean that SEBI recommends an issue?   Does SEBI tag make one’s money safe?

13. Foreign Capital Issuance Can companies in India raise foreign currency resources? a) Issue of foreign currency convertible bonds known as ‘Euro’ issues b) Issue of ordinary shares through depository receipts namely ‘Global Depository Receipts (GDRs)/American Depository Receipts (ADRs)’ to foreign investor

14. American Depository Receipts (ADRs) ADR is a U.S. negotiable Instrument in the form of a certificate denominated in US Dollars representing ownership in non-U.S. companies. Shares are issued by the issuing company with the depository bank. Depository Bank in turn tenders DRs to the investors. It is a non-voting equity holding. EX: New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Association (NASDAQ), American Stock Exchange (AMEX)

15. Global Depository Receipts (GDRs) a global finance vehicle that allows an issuer to raise capital simultaneously in two or markets through a global offering. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares. GDRs may be used in public or private markets inside or outside US. GDR issues listed on the Luxembourg Stock Exchange & the London Stock Exchange.

16. Foreign Currency Convertible Bonds ( FCCBs) FCCBs are bonds subscribed by non-residents in foreign currency. FCCBs are bonds subscribed by non-residents in foreign currency. Carry fixed interest rate & option of convertibility. Carry fixed interest rate & option of convertibility. Interest is paid in dollars & redemption is also in dollars. Interest is paid in dollars & redemption is also in dollars. Interest is low but exchange risk is more. Interest is low but exchange risk is more.

17. External Commercial Borrowings (ECBs) Indian corporates are allowed to raise foreign loans for financing infrastructure projects. Indian corporates are allowed to raise foreign loans for financing infrastructure projects. Ex: Reliance petroleum raised $125 million in the form of ECB’s in August 1996 carrying low coupon rate of 7.84% Ex: Reliance petroleum raised $125 million in the form of ECB’s in August 1996 carrying low coupon rate of 7.84%

18. Private Placement Involves issue of securities, equity or debt, to a limited no. of subscribers, such as banks, FIs, MFs, and high net worth individuals. Involves issue of securities, equity or debt, to a limited no. of subscribers, such as banks, FIs, MFs, and high net worth individuals. Privately placed issue is one seeking subscription from max. 50 members. Privately placed issue is one seeking subscription from max. 50 members.

19. Secondary Market Secondary market is an equity trading venue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. Consists of recognized stock exchanges operating under rules, by-laws and regulations duly approved by the government.

20. Role of a Stock Exchange in buying and selling shares? Trading platform provided by NSE is an electronic one and there is no need for buyers and sellers to meet at a physical location to trade. Demutualisation of stock exchanges Legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another.