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

A listed company announces a bonus issue of equity shares and fixes a record date. In the depository system, how do the bonus shares reach an eligible investor holding shares in demat form?

Bonus shares for demat holders are credited directly into the beneficiary owner's account. The issuer or its registrar gives the entitlement details to the depository, which credits eligible holders as on the record date, so no physical certificate, application or remat is needed.

  1. AThe investor must submit a physical application to the registrar to receive bonus certificates
  2. BThe issuer, through its registrar, gives the corporate action details to the depository, and the bonus shares are credited directly to the beneficiary owner's demat accountCorrect
  3. CThe DP buys the bonus shares from the market and transfers them to the investor
  4. DThe bonus shares are credited only after the investor submits a remat request

Explanation

For securities held in dematerialised form, the issuer or its registrar and transfer agent passes the entitlement to the depository, which credits the shares to the BO accounts of eligible holders as on the record date. No physical application or remat is needed. Buying from the market is not part of the process.

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