NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions
A company announces a bonus issue of equity shares to its existing shareholders. In the depository system, how are the bonus shares given to a beneficial owner holding shares in demat form?
Bonus shares are credited directly to the beneficial owner's demat account. The credit is based on holdings as on the record date, using the beneficiary position the depository provides to the issuer. No physical certificate is sent, and the broker's pool account is not used.
- AThrough physical share certificates sent by post
- BThrough direct credit to the beneficial owner's demat account based on the record date holdingsCorrect
- CThrough a cheque issued by the depository
- DThrough credit to the broker's pool account
Explanation
For companies whose shares are in demat form, the issuer gives the depository the list of beneficiaries as on the record date, and bonus shares are credited directly into each eligible beneficial owner's account. Physical certificates are not issued for demat holders. The depository does not pay cheques, and the broker pool account is used only for settlement of trades.
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