InvestorQ : I am told that with demat, I need not worry about bonus and dividends. Is that right?
Swati Naik made post

I am told that with demat, I need not worry about bonus and dividends. Is that right?

Answer
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Khushi Patel answered.
2 years ago


Demat account also acts as a central repository for all your corporate actions. Your stock splits and bonus issues are automatically credited into your demat account if your name is there on the record date. There is no additional effort required from your side. Everything happens automatically. There are two types of corporate actions viz. cash and non-cash. Let us look at cash corporate actions first. Even dividends of companies in your demat account as on the record date are automatically credited to your bank account if the bank IFSC mandate is provided. Same with interest also is the case. Or you get the dividend warrant or the interest warrant.
Then there are non-cash corporate actions like splits and bonuses. They are called involuntary non-cash corporate actions. Involuntary means you have to do nothing. The credit automatically happens. The corporate actions like rights and buybacks are voluntary because you need to take some action. Only then the credit of these actions happens in your demat account.
The demat account can also be a veritable platform for you to get an allotment of IPO shares. When you apply for IPOs, you are required to mention your demat account details and the shares are automatically credited to the extent of allotment.