was wondering that what happens to balance shares one have which are bought after record date, as they are not entitled for conversion to absorbing company’s shares. ie, no shares of absorbing entity would be credited.
so in that case if someone bought X amount of shares post record date, what would happened to them once the entity cease to exist and last trading day is over?
The shares of company that is getting merged are suspended from trading from the record date onwards. So whoever bought the shares before suspension is eligible for getting the shares.
Take HDFC’s merger with HDFC Bank as example. The record date was set as July 13, 2023 and the shares also stopped trading from that day onwards. So whoever had bought shares of HDFC before July 23, 2023 would be eligible for getting shares of HDFC Bank.
Doubt: if the record date is July 13, 2023, the wouldn’t the last date for trading be July 12, 2023.
I mean since the settlement takes place T+1. At max only ppl who bought shares on July 12, 2023 will be there on record as of July 13, 2023 is it not?
Thank you for the detailed explanations, this make sense that after record date the trading stop altogether. So basically record date is unofficial last trading date of company being absorbed? or is it official date and there is no concept of last trading day apart from record date in Indian context?
Yes. If the record date is the 13th, the stock will last trade on the 12th. From 13th it will be suspended.
Explained above:
A trading day before ex date or record date is LAST TRADING DAY in case of MERGER . there is no mention of LAST TRADING DAY in corporate announcement . IF record date is on Saturday last trading day will be Thursday .