A Demat Account keeps shares in electronic form. When a company announces a corporate action, the number of shares inside this account can change. Two very common corporate actions are bonus issues and stock splits. These things change the share quantity, and the price adjustment can be seen across your Demat Account and Trading Account.
If you’re investing or trading, it becomes useful to understand how these events work, because then you can track your holdings better, and also know why the price looks different after the record date.
What Is a Corporate Action?
A corporate action is basically a move by the company that impacts its shareholders. It can include dividend, bonus issue, stock split, rights issue, merger, buyback, and so on. NSDL describes corporate actions as benefits given by a company to its investors, either cash or non-cash.
Bonus shares and stock splits are non-cash corporate actions. They alter how many shares you hold, yet they do not directly change the total investment value at the exact time of adjustment.
What Is a Bonus Issue?
A bonus issue is when a company gives additional shares to existing shareholders, with no extra charge. Example, if it’s a 1:1 bonus issue, then you get 1 extra share for every 1 share you already had.
So if you have 100 shares and the company announces a 1:1 bonus, later your Demat Account will show 200 shares. The face value of the share typically stays the same after a bonus issue.
After the stock goes ex-bonus, the market price adjusts. So if the share price was ₹500 before the 1:1 bonus, it may move toward ₹250 after the bonus.The overall value stays around the same, though the exact number will shift with market movement.
What is a stock split?
A stock split is where the face value of a share is halved and the number of shares is doubled in the same proportion. For instance, if a company splits 1 share of face value ₹10 into 5 shares of face value ₹2 each, then your share count becomes 5 times. If you held 100 shares before a 1:5 split, the Demat Account later shows 500 shares. The price also adjusts in the same ratio. If the stock was trading near ₹1,000 before the split, it may adjust toward ₹200 after the split, subject to market movement.
A stock split doesn’t create free shares the way a bonus issue does. Instead it breaks your existing shares into smaller units.
Role of Record Date and Ex-Date
The record date is the date the company uses to identify which shareholders are eligible. Investors have to hold shares in their Demat Account by that required date, to receive the corporate action benefit. Investors need to have shares in the Demat Account by the record date to be eligible for corporate action benefits like dividends.
The ex-date (sometimes written ex date) is the date from which the stock trades without the announced benefit. If someone buys the share on or after the ex-date, they might not be eligible for the bonus or split benefit.
How It Appears in Your Demat Account
After the record date, the company and depository process the corporate action.Then the new shares, or adjusted shares, get credited into your Demat Account.
In a bonus issue, you see extra shares credited. The old number of shares is replaced by the new number of shares during the stock split. Sometimes, the ISIN may also change, especially in case of a split. Temporary changes may be reflected in the holdings section during that period.
Your Trading Account may also show a changed average price. This is because the quantity has changed and the price gets adjusted accordingly. That does not automatically mean you made an instant profit or loss just because the corporate action happened.
Simple Example
Let’s say an investor holds 50 shares of a company at ₹600 each. That makes the total value ₹30,000.
If the company announces a 1:1 bonus, the investor gets 50 extra shares. The Demat Account can show 100 shares. The price may adjust close to ₹300 per share. The total value depends on the market behaviour but is around ₹30,000.
How Bajaj Broking fits in
A platform like Bajaj Broking can help you track what you really hold, check corporate action updates, and get clarity on how your portfolio moves through both your Demat Account and Trading Account.
This is especially useful because sometimes the share quantity and even the average price get shifted after a bonus issue, or a stock split.
Conclusion
Bonus issues and stock splits do change the number of shares inside a Demat Account. In a bonus issue you receive extra shares, but in a split the existing shares get broken down into smaller units. Either way, the share price ends up adjusting based on the ratio given by the company. To make sense of the whole thing, investors should stay alert about the record date, ex-date , and also the newly updated holdings shown in both their Demat Account and Trading Account.
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This is Anil, I am a professional SEO Expert & Write for us technology blog and submit a guest post on different platforms- technootech provides a good opportunity for content writers to submit guest posts on our website. We frequently highlight and tend to showcase guests.
