A warrant is an instrument issued by a company that gives the holder the right but not the obligation to buy shares at a fixed price before a specified expiry date. Warrants are not shares themselves, they are an entitlement to buy shares later. Warrants are typically issued alongside bonds […]
What Is a Preferential Allotment?
A preferential allotment is when a company issues shares directly to a select group of investors such as promoters, institutions, or strategic partners at a fixed price. It is not open to all shareholders. Companies use this route to raise capital quickly or bring in a specific investor without going […]
Are There Any Taxes Applicable on Shares Received Through a Spin-Off?
Shares received in a spin-off are not taxed at the time of credit. Tax applies only when you sell them. Cost of acquisition – Unlike bonus shares, the cost is not zero. The original cost of your parent company shares is split between the parent and the new entity based […]
What Is a Scheme of Arrangement?
A scheme of arrangement is a court-approved restructuring mechanism that allows a company to make significant changes to its structure such as a merger, demerger, or spin-off in a legally binding way. The process The company proposes a scheme and files it with the NCLT (National Company Law Tribunal). Shareholders […]
Will I Receive Shares of the New Company?
Yes. In a spin-off, shares of the newly formed company are credited to your DEMAT account automatically and you don’t need to apply or take any action. The company announces a ratio that determines how many shares of the new entity you’ll receive based on your holding in the parent […]
How Do Spin-Offs Affect My Holdings in the Parent Company?
Your shares in the parent company remain unchanged in quantity. However, the stock price of the parent typically adjusts downward after the spin-off to reflect the value of the business that has been separated out. What you end up with Before the spin-off you hold shares in one company. After […]
What Is a Spin-Off?
A spin-off is when a company separates one of its businesses or divisions into a new independent company. Existing shareholders of the parent company receive shares of the new company at no additional cost and in proportion to their holding as of the record date. Companies do this to unlock […]
What Happens If I Do Not Participate in the Buyback?
If you choose not to tender your shares, your holding remains exactly as it is. Nothing is deducted or changed in your DEMAT. However, since the total number of shares in circulation reduces after the buyback, your percentage ownership in the company increases slightly even though your share count stays […]
Are Buyback Shares Automatically Removed from the DEMAT Account?
Yes. Once you tender your shares in a buyback, they are blocked in your DEMAT account during the offer period you cannot sell them on the exchange while they are tendered. After the offer closes: If your shares are accepted they are debited from your DEMAT and the payout is […]
How Long Does It Take to Receive Payment After Selling Shares in a Buyback?
Once the buyback offer closes and your shares are accepted, the payout is credited directly to your linked bank account by the company. You don’t need to follow up or take any additional steps. Typical timeline Payment is usually processed within 7 to 10 working days after the buyback offer […]
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