Today is the ex-date for the bonus issue of Reliance Industries. Anyone holding shares of Reliance as of October 28, 2024 (ex/record date) will get one share for every one share held.

Here’s all you need to know🧵👇

What is a bonus issue?

A bonus issue is a way for a company to reward its shareholders by giving them additional shares at no extra cost. However, the value of your investment remains the same.

When a company issues bonus shares, the number of shares increases, but the investment value remains the same. The stock price is adjusted according to the bonus ratio, this should not be mistaken for a correction or a fall in stock price.

Example:

– Before bonus: 100 shares of Reliance @ ₹2,600 each (Total value = ₹2,60,000)
– After bonus: 200 shares @ ₹1,300 each (Total value = ₹2,60,000)

You can learn more about different corporate actions and their impact in this chapter on Varsity.

Who is eligible for the bonus issue?

To be eligible for bonus shares—or any corporate action, you must purchase shares before the ex-date. For example, those who bought Reliance shares on or before October 25, 2024, will be eligible for the bonus shares.

When are the bonus shares credited?

It usually takes around 15 days from the record date for bonus shares to reflect in your demat account, though the timeline can vary based on the company’s Registrar and Share Transfer Agent (RTA).

Until the bonus shares are credited to your demat account, you will see a drop in your investment value and P&L on Kite and Console. Once the bonus shares are credited, your investment value and P&L will be automatically updated.

Impact on F&O positions

Traders holding F&O positions of the underlying announcing bonus issue or any corporate action are not eligible for corporate action benefits.

However, since the stock price adjusts, exchanges modify the lot size and strike prices of contracts accordingly.

These adjustments are done in such a way that the value of the position of the market participants before and on the ex-date remains the same.

We have explained how Reliance’s bonus issue impacts its F&O contracts in this post on Tradingqna