Why are Stock's Revalued on Bonus Record Date itself - And not on the day it's made available for Trading?

Trading
1

Hello All,

On the

  • Record Date for Bonus shares
  • the stock is revalued on record date

As per this

it takes more than 15 days for Bonus shares to get reflected in holdings.

So, why then

  • Stock is revalued on Exchanges on record date AND
  • not on the date of it made available for trading (holding statement)?
2

If that happens, won’t you be able to sell the actual shares at wrong value between the record date and bonus share credit date

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3

@Meher_Smaran

4

In most cases Bonus shares get trading approval in 6-8 working days . TCS and Infosys bonus get trading approval on 3rd working day the fastest possible …1 day for allotment second day application for listing third day listing .

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5

The prices are adjusted on the ex/record date because from that day onwards the stock starts trading without any corporate action benefit, anyone who purchases shares from the ex/record date onwards isn’t eligible for corporate action.

While anyone who has purchased before the record date is eligible. Companies need time to determine shareholders who are eligible for corporate action benefits. Having record dates helps with this. You can check out this chapter on Varsity to learn more about the concept: Corporate actions and impact on stock prices – Varsity by Zerodha

Plus as @aniln pointed out, companies also need to get approval from exchanges before bonus shares can start trading on exchanges.

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6

Thanks for letting clarity on ‘Price Adjustment date( i.e Non-Eligibility) on Issue of Bonus Shares’…

The Ones’ who are Eligible to recieve Bonus Shares are those whose names appear on the Register of Members on the record date

I am aware that , **Settlement Cycle now in NSE is T+1 **

  • the ones who bought shares a day before the Record Date - are Eligible for Bonus
  • E.g ABC Company Record Date to issue bonus is say 06/04/2024. So the ones who want to get bonus should buy the shares on or before 05/04/2024.

Is my understanding correct?. Please let me know

7

if Record date is 06/04/2024 SATURDAY last date to buy WITH BONUS will be 04 april 2024 .YES a trading day before record date purchase make you eligible for corporate action if record date is on working day like 05 april 0r 04 april .

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