CORPORATE actions are events initiated by corporates that impact shareholders.
These could be cash corporate actions such as dividends/interest payments or non-cash
actions such as issue of bonus shares, splitting the face value, consolidation,
merger, and so on, that result in change in the number of securities held by the
shareholder or allotment of other securities to the shareholder.
On announcement of corporate action by an issuer, the issuer or its registrar and
transfer agent (R&T agent) informs Depository about the details of the proposed
corporate action.
On receiving such information, Depository informs all its depository participants
(DPs) about the corporate action and DPs are asked to take the following steps:
Update the changes in tax status, bank details, address, and so on, in the beneficial
owners' accounts well in advance of the book closure or record date for the corporate
action. All balances in the CM pool accounts to be transferred to the relevant beneficiary
accounts well in advance of the book closure or record date for the corporate action.
On the basis of an electronic request placed in the Depository system by the issuer
or its R&T agent, Depository electronically downloads the beneficial position details
as of book closure or record date for the corporate action to the issuer or its
R&T agent. The details provided by Depository include particulars such as name,
address, bank details, and so on, of the beneficial owner.
The issuer allots the securities and informs Depository about allotment details
of all beneficial owners who have opted to receive securities in electronic form.
On receipt of these details, credits are effected in the accounts of the beneficial
owners on the execution date requested by the issuer. If the details of accounts
to which the issuer has made all allotments do not match with those maintained at
Depository, such records are rejected.