InvestorQ : Does the DP decide who will get bonus/splits/dividends or does company decide?
Bhavika Nehru made post

Does the DP decide who will get bonus/splits/dividends or does company decide?

Answer
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2 years ago


There are different sets of rules for different corporate actions. Let us see as under:
For Cash Corporate action e.g. dividend, interest payments etc.:
NSDL / CDSL provides to the concerned Issuer / RTA a list of the BOs with their electronic holdings as on the record/book closure date.
The Issuer / RTA then calculates the cash corporate action entitlement due to the said BOs and then distribute the cash benefits to the concerned BOs.
For Non-Cash Corporate action:
  • There are two categories here viz. voluntary non-cash and involuntary non-cash. Both have different processes.
  • Voluntary Corporate Action (e.g. rights issue, preferential allotment etc.);
  • NSDL / CDSL provides to the concerned Issuer / RTA a list of the BOs with their electronic holdings as on the record/book closure date.
  • The Issuer / RTA then submit an allotment file to CDSL containing the details of allotments to BOs.
  • Based on the said allotment file the securities are credited to the demat accounts of the BOs by NSDL / CDSL.
  • Non-Voluntary / Auto Corporate Action (e.g. Bonus issue, Merger etc.)
  • On the effective date, securities are credited to the demat accounts of the BOs having the balance on the record/book closure date based on the ratio and the ISINs mentioned by the Issuer / RTA at the time of setting up of the corporate action in CDSL system.
  • The Issuer / RTA are not required to submit an allotment file.