Category: Concepts

Dematerialisation is the process by which physical shares are converted and maintained in an electronic format.  A ‘depository participant’ plays a key role in the dematerialisation process. The process of dematerialisation is captured in the following steps: 1. The client opens a demat with a depository participant (DP) and surrenders his/her physical shares with a…

Shares of a company which are readily available for trading in the stock markets are termed as ‘Free Float’ Shares. To compute the Free-float shares of a company, subtract the following from the total shares issued by the company: Shares held by promoter/promoter groups. Shares held by the Government. Shares held by persons/entities having “controlling…

Bonus shares are additional shares that are issued to existing shareholders of a company at no additional cost. The existing shareholders are simply allocated additional shares in proportion to the number of shares currently held by them. The common trend is to indicate bonus shares as a proportion. For example, if a company comes out…

Companies resort to Right Issue is a means of raising finance by issuing additional shares to the existing shareholders of the company. Under a right issue, new shares are often issued at a discount to the current market price of such shares and the ‘existing’ shareholders of the company are given a ‘right’ to subscribe…