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

A company announces a bonus issue of equity shares and fixes a record date. Which entitlement is credited to a demat holder's account by the depository for a bonus issue?

Bonus shares are credited electronically to the demat accounts of beneficial owners holding shares on the record date. The issuer coordinates with the depository, so no physical certificates or cash are issued. Rights entitlements belong to rights issues, which are a different corporate action.

  1. AAdditional shares credited directly to the beneficial owner accounts of eligible holders as on the record dateCorrect
  2. BA physical share certificate sent by post to each holder
  3. CCash equal to the market value of the bonus shares
  4. DRights entitlements that must be renounced within the issue period

Explanation

For a bonus issue, the issuer gives the depository the list of beneficial owners as on the record date and the additional shares are credited electronically to their demat accounts. No cash or physical certificate is involved. Rights entitlements relate to a rights issue, not a bonus.

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