Bonus shares, often regarded as a gesture of appreciation towards shareholders, hold significant importance in the world of investments.
As shareholders eagerly await the issuance of bonus shares, it’s essential to understand about when these shares are credited to their demat accounts.
What is a Bonus Issue of Shares?
A bonus issue, also known as a scrip issue or capitalization issue, is when a company distributes additional shares to its existing shareholders based on their current holdings.
These shares are issued free of charge, in proportion to the shares already held by the shareholders, thereby increasing the total number of outstanding shares of the company.
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To know how long does it take fot the bonus shares to appear in in demat account, one should aware of two dates. They are record date and Ex-date.
What is the Record Date?
The record date is important in determining which shareholders are eligible to receive the bonus shares. It is the cut-off date set by the company, typically following the announcement of the bonus issue. Shareholders registered on this date are entitled to the bonus shares.
What is Ex-date?
The ex-date, also known as the ex-dividend date, is the date on or after which a security trades without a previously declared dividend or distribution. In the context of bonus shares, it is the date when the shares begin trading without the bonus entitlement.
Who is Eligible for Bonus Shares?
All shareholders who hold shares of the company on the record date are eligible to receive bonus shares. This includes both retail and institutional investors who have shares in their demat accounts.
Lets understand with real life example,
Reliance Industries Limited (RIL) declared a bonus issue in 2017. The company announced a bonus issue in the ratio of 1:1, meaning shareholders would receive one additional share for every share held.
Record date announced by the company as March 9, 2017
Now, if an investor, let’s call him Mr. Patel, owned 100 shares of RIL in his demat account as of the record date , he would be entitled to receive 100 bonus shares.
However, any investor who bought shares after the record date would not be eligible for the bonus shares.
When are Bonus Shares Credited in Demat Accounts of Shareholders?
Bonus shares are typically credited to the demat accounts of shareholders a few weeks after the record date (Normmal time is 15 days).
The exact timeline can vary depending on various factors such as the company’s internal processes, regulatory approvals, and the efficiency of the registrar and share transfer agents (RTA).
Once the bonus shares are credited, shareholders can view them in their demat accounts alongside their existing holdings.
One will also get notification from CDSL regarding the credit of the share to the demat account.
It’s essential for shareholders to keep track of their demat accounts and regularly check for updates regarding the bonus share crediting process.
If the bonus shares are not credited even after 15 days, you should contact customer care of the company.
Benefits of Bonus Shares to Shareholders:
- Enhanced Investment: Bonus shares provide shareholders with an opportunity to increase their investment in the company without any additional cost.
- Distribution of Profits: By issuing bonus shares, companies distribute their accumulated profits among shareholders, thereby enhancing shareholder value.
- Shareholder Loyalty and Trust: Bonus issues often serve as a gesture of gratitude towards shareholders, fostering loyalty and trust in the company.
- Increased Liquidity: With an increase in the number of outstanding shares, bonus issues can enhance the liquidity of the company’s stock in the market.
Also Read : Can a demat account be opened without a PAN Card?
Conclusion:
In conclusion, bonus shares play a significant role in rewarding shareholders and enhancing shareholder value. Understanding the process of when bonus shares are credited to demat accounts is crucial for investors to effectively manage their investments.
As companies continue to reward their shareholders through bonus issues, investors can capitalize on these opportunities to strengthen their portfolios and reap the benefits of long-term investment growth
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