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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. For the bonus shares to reach shareholders who hold their shares in demat form, what does the depository do on the basis of the record date?

The depository gives the issuer or its RTA the beneficial owner positions as on the record date, and the bonus shares are credited electronically to the eligible demat accounts. Investors need not apply, and demat holders do not receive physical certificates.

  1. AIt asks each investor to apply separately for the bonus shares through the DP
  2. BIt provides the issuer or its RTA with the beneficial owner positions as on the record date so that the bonus shares can be credited to the demat accountsCorrect
  3. CIt credits the bonus shares directly to the DP's own pool account for later distribution
  4. DIt sends physical bonus certificates to investors who hold shares in demat form

Explanation

On the record date the depository gives the issuer or its Registrar and Transfer Agent the list of beneficial owners and their holdings. The bonus shares are then credited electronically to the demat accounts of those holders. Investors need not apply, and physical certificates are not issued to demat holders.

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