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NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

A client, Ms. Nair, receives a bonus issue on shares held in her demat account. Which statement correctly describes how the DP handles the entitlement?

Bonus shares are credited electronically to the BO's demat account based on holdings on the record date, and the investor need not apply. They are not issued in physical form or credited to the broker's pool account.

  1. AThe bonus shares are credited electronically to her account on the basis of the record-date holdings, with no action required from herCorrect
  2. BShe must submit a physical application with the DP for every bonus issue
  3. CThe bonus shares are always issued in physical form
  4. DThe DP credits bonus shares to the broker's pool account

Explanation

Corporate benefits are based on the BO positions on the record date, and the issuer or its registrar gives credit through the depository directly to the BO account. No application is needed for such credit, and issuance is in demat form for listed holdings. The broker's pool account is not used for this.

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