8. Understanding corporate actions like dividends, bonuses and buybacks

[@karan_saluja]

Mistake at 3:19... For 3:1 bonus, you'll get 3 additional shares for every one share you own... So number of shares will be 4 times...

[@peterparker6154]

Thanks I also was confused at beginning

[@virgolani8969]

he said 30 times 3 is 120 😂

[@doesntmatter-b8p]

correction at 3:19 , 3 : 1 means, you get 3 shares over every 1 share therefore 3x30 + 30 shares (that you already have) = 120 and since the total amount of shares are now 4x the price is divided by 4

[@sriharichills]

than you

[@vedchavan6591]

Key takeaways from this chapter Corporate actions have an impact on stock prices. Dividends are a means of rewarding shareholders. The dividend is announced as a percentage of the face value. If you aspire to get the dividend, you must own the stock before the ex-dividend date. A bonus issue is a form of the stock dividend. This is the company’s way of rewarding the shareholders with additional shares. A stock split is done based on the face value. The face value and the stock price change in proportion to the change in face value A rights issue is how the company raises fresh capital from the existing shareholders. Subscribe to it only if you think it makes sense Buyback signals a positive outlook of the promoters. This also conveys to the shareholders that the promoters are optimistic about the company’s prospects.

[@Bikram_Riya]

Vey nice video about Corporate Action

[@rollinsjp1]

Wow excellent videos. Really well presented and easy to understand. Thank you so much

[@banzie74]

Difference between bonus shares and split wasn't super clear. Is it that bonus is given only to specific set of shareholders, while split is universal for all shareholders ?

[@OpsProfessionalMike]

Both 'Bonus Issues' and 'Stock Splits' are announced by the company, and ultimately have the same effect - that is, the market price of the share falls. Furthermore, there is no exchange of cash, neither company to shareholder or shareholder to company. Bonus Issues are announced as a ratio of new shares to existing shares (e.g. 1:2, meaning 1 new share for every 2 existing shares), are classified as Benefit Events, where each entitled shareholder will receive additional shares (to their existing holding), providing the shareholder has not sold prior to the Ex-Bonus Date. Stock Splits are also announced as a ratio, but rather than injecting new shares into the marketplace as occurs in a Bonus Issue), the issuer changes the structure of the share. For example A shareholder owns 1000 Xerox Corp USD1.00 shares (USD1.00 is known as the par/nominal value), then the issuer announces a Stock Split in which EVERY USD1.00 par value share is replaced by 2 USD0.50 par value shares....following the effective date of the Stock Split, the shareholder's holding of 1000 Xerox Corp USD1.00 shares has been cancelled and replaced by 2000 Xerox Corp USD0.50 par value shares - as you can imagine, the market value of the shares is the same before and after the Stock Split. Corporate Action Events which result in a change to the company's share structure are known as Reorganisation Events. Yes, you are correct, splits are universal for all shareholders as 100% of the original par value shares cease to exist post-split, replaced 100% by the new par value share. I hope this helps. Michael Simmons - author of 'Corporate Actions: A Guide to Securities Event Management'

[@shreyaworks5912]

What is meant by - When the stock goes ex dividend, the stock price will usually fall to the extent of the dividend paid out

[@gunashekarm3362]

When the company gives devidends to their share holders , assume that company gives 5rs dividend for every share we own , after the ex dividend date the price of the share reduces by 5 ( bcs 5 is the amount they gave as dividend) if the price of a single share before the ex dividend date is 325, after they give dividend it reduces to 320 that's it

[@ramunenu3793]

Very good presentation❤❤❤❤❤

[@Ayushvadgama]

Can someone explain what is the difference between bonus share and stock split. By the explanation given, its seems that both thing is same

[@bookworld6405]

What I understood is that a bonus share goes from company reserve but a split means existing shares split in value and number. Bonus is basically new shares given to already existing holders for free, split being the existing shares split into whatever number. Did that make sense?

[@l0kesh_a]

​@@bookworld6405 But in both cases your money will stay the same right? Considering there is no change in market value!

[@l0kesh_a]

When issuing a bonus the face value is the same as earlier! When share is split, face value also splits!

[@OpsProfessionalMike]

Both 'Bonus Issues' and 'Stock Splits' are announced by the company, and ultimately have the same effect - that is, the market price of the share falls. Furthermore, there is no exchange of cash, neither company to shareholder or shareholder to company. Bonus Issues are announced as a ratio of new shares to existing shares (e.g. 1:2, meaning 1 new share for every 2 existing shares), are classified as Benefit Events, where each entitled shareholder will receive additional shares (to their existing holding), providing the shareholder has not sold prior to the Ex-Bonus Date. Stock Splits are also announced as a ratio, but rather than injecting new shares into the marketplace as occurs in a Bonus Issue), the issuer changes the structure of the share. For example A shareholder owns 1000 Xerox Corp USD1.00 shares (USD1.00 is known as the par/nominal value), then the issuer announces a Stock Split in which EVERY USD1.00 par value share is replaced by 2 USD0.50 par value shares....following the effective date of the Stock Split, the shareholder's holding of 1000 Xerox Corp USD1.00 shares has been cancelled and replaced by 2000 Xerox Corp USD0.50 par value shares - as you can imagine, the market value of the shares is the same before and after the Stock Split. Corporate Action Events which result in a change to the company's share structure are known as Reorganisation Events. Yes, you are correct, splits are universal for all shareholders as 100% of the original par value shares cease to exist post-split, replaced 100% by the new par value share. I hope this helps. Michael Simmons - author of 'Corporate Actions: A Guide to Securities Event Management'

[@jithendra1994]

Why company profits are not divided to share holders?

[@ashishrohilla448]

30x3 =90 not 120 in the 1:3 example. Kindly correct.

[@जयमहाराष्ट्र]

No, Its correct Bro, Please understand its an example of Bonus and not stock split. Your innitial/Original share will be with you only but you will get additional share as Bonus. (You will get 3 extra on your 1 = 4, 4*30=120)

[@vivekanandbhamare2138]

Per explanation Bonus & Split seems same. Please guide.

[@madhangopal325]

Bonus means giving extra share to an existing shareholder. Ex: 5:1 means if u have 5 share u will receive 1 extra share. Split means a share gets divided into 2 or more shares. Ex:1:4 means if u have one share it will divided or seperated as 4 shares. So the price of share decreases.

[@aayushagarwalyt]

@@madhangopal325 yes, the value in bonus share increase whereas in split it remains the same

[@vediclush9137]

@@madhangopal325 wait doesnt it mean you get 3 additional shares for every one share and not the other way around that you just said 5:1 means for every 1 share you get 5 shares = 6

[@Unknown-bq7pd]

Yes .According to the explanation ,3:1 bonus is same as 1:4 split

[@OpsProfessionalMike]

@@aayushagarwalyt I'm sorry but it's incorrect to state that the value in bonus shares increases - the overall market value (not the price) of the share remains the same (the quantity of shares increases whilst the market price reduces proportionately)........both 'Bonus Issues' and 'Stock Splits' are announced by the company, and ultimately have the same effect - that is, the market price of the share falls. Furthermore, there is no exchange of cash, neither company to shareholder or shareholder to company. Bonus Issues are announced as a ratio of new shares to existing shares (e.g. 1:2, meaning 1 new share for every 2 existing shares), are classified as Benefit Events, where each entitled shareholder will receive additional shares (to their existing holding), providing the shareholder has not sold prior to the Ex-Bonus Date. Stock Splits are also announced as a ratio, but rather than injecting new shares into the marketplace as occurs in a Bonus Issue), the issuer changes the structure of the share. For example A shareholder owns 1000 Xerox Corp USD1.00 shares (USD1.00 is known as the par/nominal value), then the issuer announces a Stock Split in which EVERY USD1.00 par value share is replaced by 2 USD0.50 par value shares....following the effective date of the Stock Split, the shareholder's holding of 1000 Xerox Corp USD1.00 shares has been cancelled and replaced by 2000 Xerox Corp USD0.50 par value shares - as you can imagine, the market value of the shares is the same before and after the Stock Split. Corporate Action Events which result in a change to the company's share structure are known as Reorganisation Events. Splits are universal for all shareholders as 100% of the original par value shares cease to exist post-split, replaced 100% by the new par value share. I hope this helps. Michael Simmons - author of 'Corporate Actions: A Guide to Securities Event Management'

[@suyashgarg0197]

Correction at 1:05 Dividend payout is how much paid out of EPS In context here, if Face value of RS 2 share paid RS 1 dividend that shall be called dividend only

[@harshalgadhia]

Bonus shear me face value change hoga ya kya hoga?

[@OpsProfessionalMike]

In a Bonus Issue, no - the face value does not change. Bonus shares are normally issued with the same par (face) value as the existing shares which means shortly after the announcement of the Bonus Issue....the bonus shares will merge with the existing shares. The term that is used in the securities marketplace to describe such a merging is 'pari-passu' which means 'equal in all respects'. I hope this helps. Michael Simmons - author of 'Corporate Actions: A Guide to Securities Event Management'

[@ahuvaebdrasigh322]

30×3 will be 90 not 120.

[@aarav1698]

I was going to post the same "Thirty time 3 is 120 "

[@mailtosomendra]

@@aarav1698 no, but shares you end up is 120, 30 you already had

[@ankush1959]

​@@mailtosomendrari8

[@RationalistIndian]

Yes it is, but here 120 means 30+90

[@divineboutique786]

Exactly.. even i was confused 🫤

[@AuctorTrader]

hello sir the Ex-dividend date is one day or two days before the record date because on GOOGLE it shows one and you are telling two

[@जयमहाराष्ट्र]

Traditionally, Indian exchanges followed a T+2 settlement cycle, meaning trades were settled two business days after execution. This was shortened to T+1 in January 2023 and in some other market like China It is T+0 ! So Its not fix it depends on Market and its changing rulls.

[@OpsProfessionalMike]

To clarify, in a market in which the normal Settlement Cycle is T+2 (example: Trade Date on Monday, Contractual Settlement Date Wednesday....that means Record Date is the Wednesday, and Ex-Date is Tuesday....meaning that a buyer of the shares (at the latest) on Monday will be entitled to the dividend (because TD is before XD). Conversely, in a market in which the normal Settlement Cycle is T+1 (example: Trade Date on Tuesday, Contractual Settlement Date Wednesday....that means Record Date is the Wednesday, and Ex-Date is the same day (Wednesday)....meaning that a buyer of the shares on (or at any point before) Tuesday will be entitled to the dividend (because TD is before XD). Remember that its the company that chooses the Record Date, from which the stock exchange determines the Ex-Date....based on the normal Settlement Cycle in that marketplace. Its also worth mentioning that as time passes, the general trend around the globe is for marketplaces to reduce their Settlement Cycle, as its generally considered that shorter Settlement Cycles provide greater efficiency and integrity in the marketplace. Michael Simmons - author of 'Corporate Actions - a Guide to Securities Event Management'.

[@ishan_meets_you]

Watching this video where he said about wipro 21% profit And Now(20/7/2022) I got a notification of wipro profit drops 20% 😂

[@aravindam4038]

Please make videos in Regional laguages for me (Kannada) ..its easy to understand for everyone

[@varsitybyzerodha]

Hi Aravindam, we'll look into the possibilities, thanks.

[@shereefmtm]

Why company gives bonus share ?There no price change

[@dhruvranga3150]

It’s just additional share being given to the current shareholders. It’s a sort of company’s reward given to it’s shareholders for investing or keeping faith in the company

[@OpsProfessionalMike]

@@dhruvranga3150 Sorry - Bonus Issues DO result in a price change. An injection of additional shares to the marketplace, without payment of capital by the shareholders to the company (or vice versa) will result in a change to the share's market price. For example, if 1,000,000 shares are currently in issue (in the marketplace) at a current market price of GBP5.00 = market value of GBP5,000,000. If the company then announces a 1:1 Bonus Issue.....because the Bonus shares are issued free of cost there can be no increase or decrease in the market value....it remains at GBP5,000,000....but now there are 2,000,000 shares in issue....therefore the market price must adjust to GBP2.50 per share. I hope this helps. Michael Simmons - author of 'Corporate Actions - a Guide to Securities Event Management'.

[@Plasseryonpoint]

Asset yogi would have explained in much better and in simpler method

[@purnachandrakhwairakpam]

3:19.....30×4 = 120

[@sudhirsharan1841]

Please make video in Hindi

[@varsitybyzerodha]

Noted, Sudhir. We'll look into the possibilities.

[@kishan_ideaz_KI.]

30x3 is 90 and 550/3 is 183.333 so the investment value will be 16500 only (calculation error) In 3:19