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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions

A company announces a bonus issue of 1 share for every 2 held. Mr. Sharma holds 1,000 shares in his demat account on the record date. How will the bonus shares reach him?

Mr. Sharma receives 500 bonus shares, calculated as 1,000 multiplied by one-half. They are credited electronically to his demat account through the depository on the issuer's or registrar's corporate action instruction, without any application or surrender of existing shares by him.

  1. AHe must apply to the DP with a physical form for 500 shares
  2. B500 shares are credited to his demat account through the depository based on the issuer's corporate action instructionCorrect
  3. C1,000 shares are credited because bonus is one-for-one
  4. DShares are credited only after he surrenders the original holding

Explanation

A 1:2 bonus gives 1,000 x 1/2 = 500 additional shares. For demat holdings, the issuer or its RTA gives the corporate action details to the depository, which credits the bonus shares to the BO account. No application or surrender is needed.

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