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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. In the depository system, how do the bonus shares reach eligible shareholders who hold shares in demat form?

Bonus shares are credited directly to the beneficiary owner accounts of eligible shareholders based on the record date, through the depository. The investor does not need to apply or submit any form, because the issuer's registrar passes the entitlement details to the depository electronically.

  1. AThe investor must submit a demat request form for the bonus shares
  2. BThe shares are credited directly to the beneficiary owner accounts as on the record date through the depositoryCorrect
  3. CThe company posts physical certificates, which the investor then dematerialises
  4. DThe bonus shares are credited only after the investor writes to the DP

Explanation

For demat holders, the issuer or its registrar gives the corporate action details to the depository, which credits the bonus shares to the beneficiary accounts of those holding on the record date. No request from the investor is needed. Physical certificates are not issued for demat holders.

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