Good Luck Finance Ltd., a listed company issued 20 lakh equity shares of ₹180 each. The Company provided Green Shoe Option and Nishan was nominated as Stabilising Agent. On the date of listing, Corona Virus threat spread
CS Executive · Securities Laws and Capital Markets · PYQS · June 2021
Good Luck Finance Ltd., a listed company issued 20 lakh equity shares of ₹180 each. The Company provided Green Shoe Option and Nishan was nominated as Stabilising Agent. On the date of listing, Corona Virus threat spread across the globe. Consequently post listing, the share price of the company fall to ₹150. From the above: Compute the quantum of shares that can be bought by Nishan.
Answer & Explanation:
Green Shoe Option is a post listing price stabilising mechanism. Good Luck Finance Ltd. issued 20 lakh equity shares @₹180 each. As per SEBI (ICDR) Regulations, 2018, the maximum number of securities that can be borrowed for the purpose of allotment/ allocation of securities in excess of issue size shall not be more than 15% of the issue size. Hence, Nishan (Stabilising agent) can purchase 3,00,000 equity shares (15% of 20,00,000 equity shares) to stabilise the price.
Topics: Public Issues
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