Corporate Actions: What They Do to Your Shares

A corporate action is a decision by a listed company that changes what its owners hold, applied to everyone on the company's list of owners on a set day, the record date (chapter 2). Nobody buys or sells; the company acts, and the depositories: show the note on Depository (the record-keepers of shares behind every demat account) update every owner's account. Shares land in the demat account; cash lands in the bank account linked to it.

Of any action, ask four questions: does my number of shares change, does cash move, does my share of the company change, and must I choose something? LIC's bonus: the shares doubled, no cash moved, each owner's share of the company stayed the same, and nobody had to choose anything.

Picture Maya's restaurant in its ten pieces, one of them owned by the new buyer, who bought the first investor's 10% piece. The restaurant could pay out cash (she gets 10% of it), cut every piece in two (she holds 2 of 20: still 10%), offer new pieces for money (she can buy hers or watch her share shrink), or buy pieces back. Listed companies do the same things with crores of pieces and lakhs of owners. Where the picture stops: a listed company must follow the exchange's rules and dates, and its owners can sell on the exchange.

Most actions happen to every owner on the list, with no form to fill in: dividends, splits, bonus issues, mergers, demergers, name changes. Three wait for your answer before a deadline: a rights issue, a buyback and the exit offer in a delisting. Do nothing, and the choice is made for you.

The record date is the day the company takes its list of owners from the depositories. Only names on that list get the dividend, the bonus or the right. A purchase is on the list only once it has settled: show the note on Settlement (clearing and settlement), and India settles every share trade on T+1, the next working day, since 27 January 2023.

The ex-date is the first trading day on which a buyer no longer gets the benefit; before it the share trades cum, with the benefit. Under T+1 the ex-date is usually the record date itself: TCS on 25 May 2026, LIC on 29 May 2026, Info Edge on 7 May 2025. The other side of the same rule: a seller on the ex-date still gets the benefit, because the seller was on the list.

Count it on the week of 25 May 2026. TCS's record date for its final dividend was Monday 25 May, so the last day to buy was Friday 22 May: a Friday purchase settles on Monday, over the weekend. LIC's record date for its bonus was Friday 29 May, and Thursday 28 May was an NSE holiday. A Wednesday purchase settled on Friday, just in time; a Friday purchase settled on Monday 1 June, too late. Count trading days, not calendar days.

The payment comes later. TCS paid its dividend on Friday 12 June 2026, eighteen days after its record date. LIC allotted its bonus shares on Monday 1 June, the working day after its record date, and they could be sold from 2 June: SEBI's rule for bonus issues announced from 1 October 2024.

Older articles and other markets say it differently. Before T+1 the ex-date came a trading day before the record date: Reliance's rights issue had its ex-date on 13 May 2020 and its record date on 14 May. In the United States the ex-dividend date is also usually the record date, according to the SEC's Investor.gov.

A dividend is part of a company's profit paid in cash to its owners. Maya's restaurant paid out ₹1 lakh of a year's profit, and the new buyer, owning 10%, received ₹10000 (the example in what moves share prices). A listed company does the same for lakhs of owners at once, so it needs a list and a date.

TCS's final dividend for 2025-26: on 9 April 2026 its board recommended ₹31 a share; the record date was Monday 25 May; the owners declared it at the annual general meeting: show the note on AGM (AGM, the yearly meeting of owners) on Tuesday 9 June; it was paid on Friday 12 June 2026. An interim dividend is declared by the board during the year; a final dividend is recommended by the board and declared at the AGM. Neither promises the next.

The record date can come first. TCS fixed its list of owners fifteen days before the owners voted: the right to the dividend was settled on 25 May, the money waited for the meeting. Companies set this order differently, so read each notice for its own dates rather than assuming a pattern.

It lands in the bank account linked to your demat account, never in your broker's trading balance (how your three accounts work). A dividend counts as income, and tax may be deducted before it reaches you (how dividends are taxed).

Dividends are quoted per share, sometimes as a percentage of face value, the small nominal value printed on each share. TCS's face value is ₹1, so its ₹31 is "3100% of face value". Against the ₹2317.30 a TCS share closed at on 22 May, the last day to buy, ₹31 is about 1.3% (derived). Judge a dividend against the price, not the face value.

On the ex-date the price usually falls by about the dividend, because that cash has left the company, though the day's other news can hide it (what moves share prices).

If it never arrives: a dividend that cannot be paid (a closed bank account, an old address) waits in the company's unpaid dividend account; after seven years it moves to the Investor Education and Protection Fund: show the note on IEPF (IEPF), and shares whose dividends went unclaimed for seven years in a row move there too. Owners claim them back from the IEPF Authority on form IEPF-5, at no fee; the Authority itself warns against agents offering "claim processing" (spotting fraud). Keep the bank account linked to your demat current.

LIC's bonus, step by step. The board approved a 1:1 bonus on 13 April 2026, subject to the owners' approval; the owners approved it by postal ballot (a vote by post or online), with the results filed on 18 May; the record date was 29 May; on 1 June LIC allotted 6324997701 new shares (about 632 crore, 6.3 billion), one for each share held, taking its total to 12649995402. The price halved, from ₹830.00 to ₹417.60 at the open; half of ₹830.00 is ₹415.00 (derived). Each owner's share of LIC stayed the same.

Where do bonus shares come from? A company keeps part of its profits year after year as reserves. A bonus moves some of them into share capital: show the note on Share capital (the face value of all its shares): LIC moved ₹6324.99 crore, about 4% of the ₹146440.58 crore of reserves it reported for 31 December 2025, and its share capital doubled to ₹12649.99 crore. No money came in or went out; it is an entry in the company's books. The face value stayed ₹10 and the ISIN, the share's 12-character identity code, stayed INE0J1Y01017. (It is not the bonus LIC adds to its insurance policies, a different thing.) In the United States a bonus issue is called a stock dividend.

A split cuts each share into smaller ones. Info Edge, the company behind Naukri.com and Zomato's first investor (you met it in the first lesson), cut each ₹10 share into five ₹2 shares; the record date was 7 May 2025. ₹6984.50 (the 6 May close) divided by 5 is ₹1396.90 (derived); the share opened at ₹1387.50. Ten shares worth ₹69845.00 became fifty worth ₹69375.00 at the open (derived). The face value fell to ₹2, the reserves were untouched, and the shares got a new ISIN: INE663F01024 became INE663F01032.

Why do it? LIC gave three reasons: to reward its owners, to bring its share capital closer to its reserves, and to make the share "more affordable" to more investors. A lower price per share is not a cheaper company (market cap is price × shares).

The reverse split joins shares into fewer, dearer ones, with the same total. It is rare among large Indian companies; a well-known case is Citigroup in the United States: from 9 May 2011 every 10 shares became 1, its shares fell from about 29 billion to about 2.9 billion, a share that closed at $4.52 became one near $45, and owners' fractions were sold and paid in cash. The shares had not traded near $45 since October 2007: a reverse split changes the price of one share, not the business behind it, and losses can follow one as easily as gains.

The weekend that looks like a loss. The price halves on the ex-date, but the new shares arrive later: LIC's record date was Friday 29 May, and SEBI's rule has bonus shares credited on the next working day, Monday 1 June, tradable from Tuesday 2 June. Over that weekend a holder's account could show 10 shares at the new price, ₹4113.50 at Friday's close (derived), as if half the money had gone. Nothing had; the other 10 shares were on their way.

What to check: the new count (old × the ratio), the new price (about old ÷ the ratio), the ISIN (new after a split, the same after a bonus), the credit date and the day the new shares can be sold. Look up Info Edge's or LIC's chart now and the older prices are already divided by 5 or by 2, and bonus shares enter your cost record at a nil cost: chapter 9 explains both.

On the restaurant (an illustration): say the restaurant offers every owner one new piece for each piece held, at ₹1 lakh, below the ₹1.5 lakh a piece last sold for. If the new buyer pays, she holds 2 of 20 pieces: still 10%. If she says no and Maya buys her own nine, the new buyer's single piece becomes 1 of 19, about 5.3%, and because the new pieces were sold below their worth, her piece is now worth about ₹1.26 lakh instead of ₹1.5 lakh (derived: ₹15 lakh + ₹9 lakh raised, over 19 pieces). That is why the right itself has a value.

The real one: Reliance, May 2020. One new share for every 15 held, at ₹1257 (₹10 face value plus ₹1247 premium); record date Thursday 14 May 2020; 422626894 shares offered, ₹53124.20 crore raised; owners applied for 1.59 times the shares on offer.

The right arrives as a line in your demat account. Each holder's rights entitlement (RE) was credited before the issue opened, with its own ISIN (INE002A20018), and it traded on NSE as RIL-RE from 20 to 29 May 2020 (its first day's close: ₹202.15). Think of it as a coupon with an expiry date: it lets you buy, it is not the share, and if unused it disappears from the account when the issue closes. Under SEBI's rules entitlements are credited in the demat account and can be sold on the exchange until a few days before the issue closes; applications go through ASBA: show the note on ASBA, which blocks the money in your bank account until shares are allotted (ASBA, the IPO lesson).

Three paths for a holder of 15 shares, who gets one RE. Apply and pay: 16 shares. Reliance's were partly paid: show the note on Partly paid share: ₹314.25 on application, ₹314.25 in May 2021 and ₹628.50 in November 2021, and until then they traded as a separate line, RELIANCEPP, from 15 June 2020. Sell the right: keep 15 shares and take the sale money (the RE closed at ₹202.15 on its first day). Do nothing: the RE lapses when the issue closes, and you keep 15 shares with a share of the company 6.25% smaller if every other owner takes theirs (derived).

Two cautions. Buying an RE on the exchange gives you only the right to apply and pay the issue price. And a discount is not a gift: whether to put in more money depends on what the company will do with it, which the offer document states.

In a tender buyback the company offers to buy some of its own shares at a fixed price, and owners choose whether to offer ("tender") theirs. TCS's of 2023: up to 40963855 shares at ₹4150 each, ₹17000 crore in all, approved by the owners by postal ballot. The record date was Saturday 25 November 2023; the day before, the share closed at ₹3457.10 on NSE, so the offer price was about 20% higher (derived). Owners offered shares from 1 to 7 December; payment was settled on 12 December.

Two groups. A small shareholder holds shares worth ₹2 lakh or less at the closing price on the record date; with the record date on a Saturday, that was Friday's ₹3457.10, so up to about 57 TCS shares (derived). SEBI's rules keep 15% of the shares bought back for small shareholders: 6144579 of TCS's 40963855. A small shareholder was entitled to have 1 of every 6 shares held bought back; everyone else 2 of every 209.

The rule, in two terms. Entitlement is the part the company accepts in full if you offer it. Acceptance is what is finally bought: your entitlement, plus a share of whatever is left over when other owners offer fewer than theirs, shared in proportion among those who offered more. Shares not accepted return to your demat account.

What happened. Small shareholders offered 17652809 shares, almost 2.9 for every share kept for them, so only about 35 of every 100 offered could be bought (derived). Larger holders offered more than seven times the shares kept for them.

Worked for a holder (an illustration): 12 shares, worth ₹41485.20 at that close (derived). Entitlement: 2. Offer none: she keeps all 12, and no money comes. Offer 2: both are bought for ₹8300.00, and 10 shares remain. Offer all 12: the 2 are still bought; the other 10 only from shares other owners leave unoffered. The rest come back.

Other routes, in a line each. A company may also buy back on the exchange, like any buyer, a route SEBI allowed again from 1 August 2026 for buybacks of less than 15% of paid-up capital and free reserves: show the note on Free reserves; owners have no form to fill in there. How buyback money is taxed has changed more than once; the tax lesson has the current rule.

Merger: two become one. HDFC Ltd merged into HDFC Bank on 1 July 2023: holders received 42 HDFC Bank shares for every 25 HDFC Ltd shares; the record date was 13 July 2023, and HDFC Ltd's last day on NSE was 12 July. That day 25 HDFC Ltd shares closed at ₹68107.50 and 42 HDFC Bank shares at ₹68583.90, 0.7% apart (derived): the market had already priced the swap. Expect the old line to leave your statement and the new one to arrive, not always on the same day.

Demerger: one becomes two. Tata Motors split its commercial-vehicles business into a separate company: the scheme took effect on 1 October 2025, the record date was Tuesday 14 October, and holders received one share of the new company for each Tata Motors share they held, while keeping that share. In the United States this is called a spin-off.

The value moved, per share. On 13 October a Tata Motors share closed at ₹660.75. On the record date its price was found again in a special pre-open session, NSE's way to reprice a share after a restructuring (orders from 9:00 to 9:45 am, limit orders only): ₹400.00. The ₹260.75 difference was the value that left with the trucks business, and it became the new share's starting reference price: show the note on Reference price when it listed (derived: ₹400.00 + ₹260.75 = ₹660.75).

Then buyers set the price. The new share could be sold only from Wednesday 12 November 2025, when it listed as TMCV. It opened at ₹335.00 and closed at ₹329.45, 26.3% above that reference (derived): the arithmetic gives a starting point, not a price.

Fractions. With a ratio like 42 for 25, few holdings divide evenly. The scheme says what happens to the leftover; usually fractions are pooled, sold by a trustee and the money paid out in proportion.

Cost. The company tells owners how to split their original cost between the two lines; Tata Motors' split is in chapter 9.

Delisting removes a share from the exchange: you still own it, but there is no exchange price and selling becomes hard. In a voluntary delisting, the promoters: show the note on Promoter (the group in control) make an exit offer for everyone else's shares; owners say at what price they would sell, and the offer succeeds only if the promoters reach 90% of the shares (SEBI's rule). If it succeeds, owners who missed it can still sell at that price for at least a year.

Vedanta, October 2020, the case that went badly. Its promoters' offer closed on Friday 9 October 2020, after the bidding window was extended to 7 pm; on Saturday 10 October Vedanta announced that the offer had failed. On Monday 12 October the share opened at ₹109.70 against Friday's ₹121.85 and closed at ₹96.95, 20.4% lower (derived). Owners who had bought expecting a delisting price found none.

A new name, the same security. Macrotech Developers became Lodha Developers on 16 June 2025. Its NSE symbol stayed LODHA and its ISIN: show the note on ISIN, INE670K01029, did not change: the same company, the same shares, a new name on the line.

The same name, a different security. This one came with a demerger (chapter 7), not a simple rename, and the name moved with it. The new commercial-vehicles company was renamed Tata Motors Limited on 29 October 2025 and listed on 12 November 2025 as TMCV, with a new ISIN, INE1TAE01010. The old company kept its ISIN, INE155A01022, and became Tata Motors Passenger Vehicles (TMPV). Someone who bought "Tata Motors" before October 2025 now holds TMPV, plus TMCV from the demerger.

What to check: the ISIN on your statement, and every offer letter's window and price.

The cliff Maya saw. LIC's closes on NSE, 28 October 2025 to 28 October 2026: ₹899.90 to ₹391.45, a fall of 56.5% on the raw chart (derived). Divide every price before 29 May 2026 by 2 and the year starts at ₹449.95: a fall of 13.0% (derived). The first number counts a halving that was only the share count changing.

How adjusting works. Divide prices before a bonus or a split by the ratio (2 for LIC's 1:1, 5 for Info Edge); after a demerger, scale the parent's earlier prices by its share of the price (Tata Motors: ₹400.00 ÷ ₹660.75, about 0.605, derived). Providers differ: some also adjust for dividends and rights issues. Check which chart you are reading.

The holder's view (an illustration). 10 LIC shares on 28 October 2025, worth ₹8999.00, became 20 shares worth ₹7829.00 a year later: 13.0% less, not 56.5% (derived; dividends not counted, price and total return).

Your cost record: show the note on Cost record, event by event (illustrations on real events). Split: 10 Info Edge shares bought for ₹69845.00 become 50 shares at ₹1396.90 each, the same total and the same purchase date. Bonus: 10 LIC shares bought at ₹830.00 stay at ₹830.00 each with their date; under India's tax rules the 10 new shares count at ₹0, dated 1 June 2026, the allotment. An app may show an average of ₹415.00; that is not the cost the tax rules use. Demerger: Tata Motors told owners to put 68.85% of their original cost on TMPV and 31.15% on TMCV, so 10 shares bought at ₹660.75 become 10 at ₹454.93 and 10 at ₹205.82 (derived). Merger: HDFC Bank shares received take the cost of the HDFC Ltd shares given up. Rights: what you paid (₹1257 in Reliance's case), plus what you paid for any RE you bought.

Keep the papers: contract notes, the allotment letter, the company's cost notice. How these numbers are taxed is in the tax lesson.

Find the notice. Listed companies file every action with the exchanges; NSE and BSE list them under corporate announcements and corporate actions, and the company posts them on its own site. Your broker or depository may also send a message (alerts and statements). LIC, 13 April 2026: the board "approved the issuance of bonus equity shares in the proportion of 1:1", "subject to the approval of shareholders".

Read the status and the dates. Proposed (by the board) is not approved (by the owners, and where needed a court or a regulator). A record date is announced only after the approvals, and at least three working days after them (NSE). LIC: postal ballot notice on 17 April, results filed on 18 May, record date announced on 21 May for Friday 29 May. Note the last day to buy (Wednesday 27 May, chapter 2), the credit date and any deadline to apply, to offer shares or to sell a right.

Predict. New shares, cash, share of the company, any fraction. LIC, 10 shares: 20 shares, no cash, the same share of the company, no fraction; the new 10 credited on Monday 1 June and free to sell on 2 June, so Friday's account shows only half the value (chapter 4).

Act, only if asked. Rights issues, buybacks and exit offers need an application through your broker before the window closes; everything else needs nothing from you.

Reconcile and file. LIC's letter of 1 June 2026 says 6324997701 bonus shares were allotted to the owners on the list on 29 May. Your statement should show 20 shares, 10 of them new and free to sell from 2 June; for a dividend, the bank credit should equal shares × dividend, less any tax deducted. Check the ISIN, save the letter, and update your cost record (chapter 9). If something does not match, ask your broker first, then the company's registrar: show the note on Registrar (the firm that keeps its list of owners and sends its payments); the lesson on staying safe has the complaint route.

Every action in this lesson came with a notice and a date to read. Some days the exchange itself steps in, with no notice from the company: a share stops at a price limit, or is put on a watch list for closer checks. That is the next lesson.