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NISM Certifications · NISM-Series-VI: Depository Operations

Public Offering and Corporate Actions in Depository Operations

This chapter covers how a depository supports issuers in public offerings and corporate actions. You learn how securities are credited in demat form, how benefits like dividend, bonus, split and rights reach holders on the record date, and how mergers, buyback and delisting are processed. Solve questions by identifying who does what, and when.

What this chapter covers

This chapter covers the special services a depository gives to issuers and investors beyond holding and transferring securities. Two themes run through it: public offerings (IPO and FPO) and corporate actions (dividend, bonus, split, rights, mergers, demergers, buyback, delisting).

The central idea is that the depository does not decide corporate actions. The issuer decides them. The depository, through the registrar and transfer agent (RTA) and its participants, makes sure the right holders get the right benefit in their demat accounts. Most questions test who initiates a step, who supplies data, and which date fixes entitlement.

This chapter links to the rest of the paper. It builds on account opening, holding and transfer of securities, and the roles of the depository, depository participant (DP), issuer and RTA. It also connects to settlement and the record-date concept. If those basics are weak, the corporate action flow will feel like a list of facts instead of one connected process.

Corporate actions and public offerings are practical, process-based topics, so the exam asks direct questions on roles, sequence and terms. These are easy marks if you have the flow clear, and costly if you mix up similar terms, because wrong answers carry negative marking of 25% of the marks assigned to the question. Real work in a DP or RTA also involves these services daily, so the effort pays off beyond the exam.

Special Services - Public Offering / Corporate Actions: topics in the order to study them

  1. 1Depository Role in Public Offerings (IPO/FPO)Start here because it shows the basic issuer, RTA, depository and DP relationship, which every later topic reuses.
  2. 2Corporate Actions: Dividend, Bonus, Split and RightsNext, learn the common actions and the record-date logic that decides who is entitled.
  3. 3Rights Issue and Renunciation via Rights EntitlementsRights need extra steps, so study them once you know the basic corporate action flow.
  4. 4Mergers, Demergers, Buyback and Delisting ProcessingThese are structural actions that change or remove securities, so they make sense after simple benefits are clear.
  5. 5Electronic Credit, Corporate Benefits and Issuer CoordinationFinish with the end-to-end view of how benefits are credited and how issuers coordinate, which ties everything together.

How to prepare Special Services - Public Offering / Corporate Actions

Treat this chapter as one process with different triggers. Learn the flow first, then the details.

  1. Draw the four parties on paper: issuer, RTA, depository and DP. Write one line on what each does in a public offering.
  2. For each corporate action, note who announces it, what the record date does, and what the holder receives in the demat account.
  3. Make a small comparison list for dividend, bonus, split and rights. Mark which one changes the number of shares, which brings cash, and which needs an investor decision.
  4. Study rights entitlements as a sequence: entitlement is credited, the holder may apply or renounce, and the rest follows. Say the sequence aloud until it is smooth.
  5. For mergers, demergers, buyback and delisting, write what happens to the holder's existing securities in each case.
  6. Use your workbook for exact terms, timelines and conditions. Do not rely on memory for any limit or period.
  7. Practise MCQs by topic, then mixed. Review every wrong answer and note which party or date you confused.

Common mistakes in Special Services - Public Offering / Corporate Actions

  • Thinking the depository decides or announces corporate actions.

    Fix: Remember the issuer decides. The depository and DP only process entitlements to the right holders.

  • Mixing up record date with the date the benefit is credited.

    Fix: Record date decides entitlement. Credit follows afterwards. Tie each date to one question: who, or when.

  • Confusing bonus and split.

    Fix: A bonus issues new shares from reserves. A split divides existing shares by reducing face value. Learn the mechanism, not just the result.

  • Treating rights entitlements as ordinary shares.

    Fix: A rights entitlement is an opportunity to subscribe, and it can be renounced. Learn the steps in order.

  • Memorising timelines and conditions loosely.

    Fix: Take every period and condition straight from the workbook and revise them as a short list.

  • Guessing in doubtful questions without checking the marks.

    Fix: Wrong answers cost 25% of the question's marks. Guess only after you remove at least one option you know is wrong.

Last-day revision: Special Services - Public Offering / Corporate Actions

  • The issuer decides corporate actions; the depository and DPs execute the credit to holders.
  • The RTA works for the issuer and coordinates with the depository on corporate benefits.
  • The record date fixes who is entitled to a corporate benefit.
  • Securities in a public offering are credited to the investor's demat account in electronic form.
  • Dividend is a cash benefit; bonus and split change the number of shares held.
  • A split changes the face value and the number of shares, not the total value held.
  • Bonus shares are issued to existing holders in a ratio set by the issuer.
  • A rights issue offers existing holders the chance to subscribe; entitlements can be renounced.
  • Rights entitlements are credited electronically to the holder's demat account.
  • In mergers and demergers, holdings are credited according to the approved scheme.
  • Buyback and delisting involve the issuer and exchange rules; the depository processes the resulting holding changes.
  • Check the workbook for exact timelines before the exam; never guess a limit.

Special Services - Public Offering / Corporate Actions practice questions

Special Services - Public Offering / Corporate Actions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Special Services - Public Offering / Corporate Actions: frequently asked questions

What is the depository's role in an IPO?

The depository enables securities to be allotted and credited in electronic form to investors' demat accounts. It works with the issuer, the RTA and DPs to make this happen. The issuer remains responsible for the offer itself.

Who decides a dividend, bonus or split?

The issuer decides these actions, following its internal approvals and applicable rules. The depository does not decide them. It processes the benefit to the holders on record.

Why is the record date so important?

The record date fixes which holders are entitled to a corporate benefit. Only those on record on that date receive it. Questions often test this link directly.

Is there negative marking in NISM-Series-VI?

Yes. Wrong answers carry negative marking of 25% of the marks assigned to the question. The exam has 100 questions for 100 marks in 2 hours, and the pass mark is 60%.