Corporate Actions on WebNotes

How to apply in a rights issue on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A rights issue is a corporate action in which a listed company offers additional shares to its existing shareholders at a discounted price, in proportion to their current holdings, before approaching the general public. Shareholders receive Rights Entitlements (REs), tradeable instruments credited to their demat accounts, representing the right to subscribe to a specified number of new shares at the issue price.

A 1:4 rights issue means one new share can be subscribed for every four existing shares held on the record date. Shareholders may:

How to handle a fractional share entitlement

Tue, 12 May 2026 00:00:00 +0000

A fractional share entitlement arises when a corporate action (such as a bonus issue, stock split, rights issue, merger, or demerger) produces a non-integer number of shares for a particular shareholder. Since shares in India are held in whole numbers in the demat account, the fractional portion cannot be credited as a partial share.

For example:

A 3:7 bonus issue on a holding of 100 shares produces an entitlement of 42.857 shares. The shareholder receives 42 whole shares; the 0.857 fractional entitlement cannot be credited.
A merger swap ratio of 11:16 on 100 shares produces 68.75 new shares. The shareholder receives 68 whole shares; the 0.75 fraction is handled separately.

Under Indian market practice, companies handle fractional entitlements by paying cash to shareholders in lieu of the fractional portion, at a reference price determined by the company (typically the market price on or around the record date). This guide covers how fractional entitlements are processed on Zerodha and their tax treatment.

How to handle a merger or demerger on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A merger (or amalgamation) is a corporate action in which two or more companies combine into a single entity, with shareholders of the merging (transferor) company receiving shares of the surviving (transferee) company in exchange for their old shares, according to a share swap ratio. A demerger is the reverse: a company separates one or more of its businesses into a newly listed entity, with existing shareholders receiving shares in the new company in addition to (or in exchange for) a portion of their existing shares.

How to participate in a bonus issue on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A bonus issue is a corporate action in which a listed company distributes additional shares to existing shareholders free of cost, in proportion to their current holdings, by capitalising accumulated reserves. No payment is required from the shareholder. A 1:1 bonus means one additional share for every share held; a 2:1 bonus means two additional shares for every share held.

Unlike a rights issue, a bonus issue is automatic: shareholders who are on the register on the record date receive bonus shares without submitting any application or paying any consideration. Participation on Zerodha therefore requires no active step beyond holding shares before the ex-date.

How to participate in a capital reduction on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A capital reduction is a corporate action in which a listed company reduces its paid-up share capital. Capital reductions are used for several purposes:

To return surplus cash to shareholders (return of capital).
To write off accumulated losses against capital (loss absorption, with no cash return).
To restructure the balance sheet before a merger, demerger, or restructuring.
To reduce the face value of shares (face value reduction without cash return).

Capital reductions are governed by Section 66 of the Companies Act, 2013, and require approval from both the shareholders (by special resolution) and the National Company Law Tribunal (NCLT). After NCLT sanction, the company reduces its share capital by cancelling or buying back a portion of paid-up capital, or by reducing the face value per share.

How to participate in a delisting offer on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A delisting offer is a corporate action in which a company proposes to remove its shares from one or both stock exchanges, typically because the promoters wish to take the company private. When a company is delisted, its shares no longer trade on the exchange, which means remaining shareholders lose liquidity in their investment.

SEBI’s (Delisting of Equity Shares) Regulations, 2021 govern voluntary delisting. Under these regulations, the acquirer (promoter or acquirer entity) must:

How to participate in a scheme-of-arrangement event on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A scheme of arrangement is a court-approved corporate restructuring mechanism available under Sections 230 to 232 of the Companies Act, 2013. It is the umbrella legal structure under which mergers, demergers, capital reductions, amalgamations, and complex business reorganisations are implemented in India. The scheme requires approval from:

The shareholders of the company (by a majority in number representing three-fourths in value of those voting).
The creditors (if creditors are affected).
The National Company Law Tribunal (NCLT), which gives the final sanction.

Once the NCLT order is obtained and filed with the Registrar of Companies (RoC), the scheme is legally effective and binding on all shareholders, including those who voted against it. Individual shareholder participation during the scheme process (voting) is, however, important and a legal right.

How to participate in a stock split on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A stock split is a corporate action in which a company divides each existing share into multiple shares of a smaller face value, while keeping the total paid-up capital constant. For example, a 5:1 split on a Rs 10 face-value share produces five new shares of Rs 2 face value each for every existing share held. The aggregate value of a shareholder’s holding remains the same immediately before and after the split; only the number of shares and the face value change.

How to participate in a takeover or spin-off on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A takeover occurs when an entity (acquirer) gains effective control of a listed company by acquiring a substantial portion of its shares or voting rights. Under Indian law, this triggers the acquirer’s obligation to make an open offer to remaining public shareholders under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations). A spin-off is a form of corporate restructuring in which a company separates a subsidiary or division into an independent listed entity, distributing shares of the new company to existing shareholders.

How to receive and reinvest a dividend on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A dividend is a distribution of a company’s profits to its shareholders, typically declared by the board of directors and approved at the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM). Dividends in India are paid in cash directly to the registered bank account of the shareholder; no action is required from the shareholder to receive a dividend.

Zerodha clients receive dividends automatically from the company’s Registrar and Transfer Agent (RTA) via NEFT/RTGS to the bank account linked to their Zerodha demat account. Zerodha does not charge any fee for dividend credit.

How to tender shares in a buyback on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A share buyback (or share repurchase) is a corporate action in which a listed company purchases its own shares from existing shareholders, reducing the total shares outstanding. In India, listed companies may conduct buybacks through two routes: the tender offer route (via the exchange’s settlement platform) and the open market route (through the secondary market without shareholder action). This guide covers the tender offer route, which requires shareholders to actively tender shares within the offer period.

How to tender shares in an open offer on Zerodha

Tue, 12 May 2026 00:00:00 +0000

An open offer is a mandatory or voluntary offer made by an acquirer (and persons acting in concert) to the public shareholders of a listed target company, to purchase a minimum of 26% of the total shares outstanding. Open offers arise primarily in the context of takeovers and are governed by the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations), commonly called the Takeover Code.

Unlike a buyback (where the target company purchases its own shares), an open offer is made by an external acquirer seeking control of the company. Public shareholders who choose to exit may tender their shares to the acquirer at the announced open offer price. Participation is voluntary for public shareholders: those who do not tender continue to hold shares in the company (now with the new controlling shareholder).

Buyback and tender offers on Zerodha

Mon, 11 May 2026 00:00:00 +0000

A share buyback (also called a share repurchase) is a corporate action where a company purchases its own shares from existing shareholders, reducing the total shares outstanding. In India, listed companies can conduct buybacks through two routes: the tender offer route (through the exchange platform) and the open market route (through the secondary market). Zerodha facilitates shareholder participation in tender offer buybacks through Kite.

Tender offers are distinct from open market buybacks: in a tender offer, the company announces a buyback price, a buyback period, and invites shareholders to tender their shares at the buyback price or below. Shares tendered at or below the final buyback price are accepted (subject to the company’s acceptance ratio). The open market buyback does not require any action from individual shareholders; the company buys shares from the exchange like any other buyer.