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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 to its existing shareholders. In the depository system, how are the bonus shares given to shareholders who hold shares in demat form?

Bonus shares are credited electronically to the beneficiary owner accounts of demat holders through the depository, based on the holdings on the record date. No physical certificates, special bonus account or application is needed from the shareholder.

  1. AShareholders must apply physically to the company for share certificates
  2. BShares are credited directly to the beneficiary owner accounts through the depository on the basis of the record date holdingsCorrect
  3. CThe DP debits the bonus shares from the clearing member's pool account
  4. DThe shareholder must first open a separate bonus account with the depository

Explanation

For demat holders, the issuer company gives the depository the entitlement based on record date positions, and the depository credits the shares to the beneficiary accounts through the DPs. No physical application or special account is needed. The pool account is used only for trade settlement.

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