Bonus, split, buyback or rights: what's happening to my shares?

Riya's mum forwards a stock-exchange alert with three exclamation marks. "Sameer Chai: board meeting to consider corporate action." She wants to know if she should panic.

Everything below is a "what if" for Sameer Chai. None of it has happened. Each ending shows what it would do to her 200 shares, worth 200 × ₹54 = ₹10,800 today.

The tree

Start at the top. Answer each question with the company's announcement in front of you.

1. Are you being asked to pay money for new shares?
   • Yes → rights issue.
   • No → go to 2.
2. Is the company offering to pay you for shares you hand back?
   • Yes → buyback.
   • No → go to 3.
3. Is the face value of each share changing?
   • Yes → stock split.
   • No, but you're getting extra shares free → bonus issue.

Question 1, money from you

A rights issue offers existing shareholders new shares, in proportion to what they hold, usually below the market price. Your money goes to the company.

The what-if: 1 new share for every 10 held, at ₹45, when the market price is ₹54. That's 50 lakh new shares and ₹22.5 crore raised.

Riya's mum's 200 shares, three ways:

Where "in theory" comes from: after the issue the company is worth its old ₹270 crore plus the new ₹22.5 crore, ₹292.5 crore, spread over 5.5 crore shares. That's about ₹53.18 a share. 220 × ₹53.18 is ₹11,700, exactly her ₹10,800 plus the ₹900 she paid. 200 × ₹53.18 is about ₹10,636.

SEBI now wants a rights issue finished within 23 working days of the board's approval, and open for at least 7 and at most 30 days. The window is short. Watch for it.

Question 2, money to you

A buyback is the company buying its own shares and cancelling them. Only shareholders who choose to sell get paid.

The what-if: a tender offer for 25 lakh shares at ₹60, when the market price is ₹54. That's ₹15 crore of the company's cash.

Riya's mum's 200 shares:

• If she tenders. Every share accepted brings ₹60, ₹6 more than the screen price. She may not get all 200 accepted. Acceptance runs in proportion to holdings, with 15% of the buyback, 3.75 lakh shares, kept for small shareholders like her, whose holdings are worth up to ₹2 lakh.
• If she doesn't. She keeps 200 shares, now out of 4.75 crore instead of 5 crore. Her slice grows a little. So does Sameer's: 3 crore of 4.75 crore is about 63%.

Profit per share rises too: ₹9 crore over 4.75 crore shares is about ₹1.89, up from ₹1.80. But the company also gives up whatever the ₹15 crore of cash would have earned.

At ₹15 crore, this buyback is above 10% of capital and free reserves (10% of ₹110 crore is ₹11 crore), so shareholders would have to pass a special resolution. The law caps any buyback at 25%. A bill now before Parliament, the Corporate Laws (Amendment) Bill, 2026, would let some classes of company go higher. It isn't law yet.

Question 3, the face value

If no money moves, look at the face value, the fixed amount printed on each share. For Sameer Chai it's ₹10.

It changes: a stock split. The what-if: each ₹10 share becomes two ₹5 shares. 5 crore shares become 10 crore. No money moves at all, not even inside the company. Share capital stays ₹50 crore: 10 crore × ₹5.

It stays at ₹10: a bonus issue. The what-if: one free share for each one held. 5 crore shares become 10 crore, still at ₹10 each. This time ₹50 crore moves inside the company, from reserves into share capital. Reserves fall from ₹60 crore to ₹10 crore, share capital rises from ₹50 crore to ₹100 crore, and net worth stays ₹110 crore.

Riya's mum's 200 shares, either way:

The date all four branches share

Every ending depends on one date: the record date, the day the company takes its list of shareholders. Be on the list and you get the rights, the buyback offer, the split shares or the bonus. Under T+1 settlement, a share bought one working day before the record date gets there in time.

For a bonus, the new shares reach demat accounts the working day after the record date and can be traded the day after that.

Where people take the wrong branch

• "Bonus" in a headline doesn't mean a payout. No cash arrives. Your holding is worth the same.
• The price halving after a split or bonus isn't a crash. The trading app may not have adjusted your buy price yet. Compare value, not price.
• A rights issue ignored isn't neutral. On paper, it costs you the value of the rights.
• A buyback price above the market isn't guaranteed money for every share. It depends on how many shares others tender.
• A reverse split, or consolidation, is a split run backwards. Fewer shares, higher face value. It also sits on branch 3.

This guide explains how these actions work. It isn't advice on what to do with any of them.