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 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.

Bonus Issue on WebNotes

How to handle a fractional share entitlement

How to participate in a bonus issue on Zerodha