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Impact of corporate different actions on MTF position
Bonus Issue: When the company distributes additional shares to existing shareholders based on the number of shares held by them. Suppose ABC Limited announces a bonus issue in the ratio of 1:1. It means that for every share held by existing shareholders, they will receive one additional share as a bonus.
Stock Split: It involves dividing the existing shares of a company into multiple shares depending upon the split ratio, effectively increasing the number of outstanding shares while lowering the price per share. For example, if an investor holds 100 shares priced at Rs 100 each before a 2-for-1 split, they would own 200 shares priced at Rs 50 each after the split.
Impact on your Position: You will not be allowed to hold your MTF position during a Bonus/Split corporate action. Communication will be sent to you informing of the deadline till which position can be held. If you exceed the deadline, then your position will be auto squared off.
In majority of the cases position can be held till T minus 2 days with T indicating the record date of the issue. If you want the advantage of the bonus/split issue, then you can convert the position to delivery and hold the stocks on the record date in your demat accout.
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