Merger on WebNotes

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 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.