What Happens If You Have Less Than 25 Shares Of HDFC?
A shareholder will get 42 fully paid-up shares of HDFC Bank for every 25 held in HDFC.
Housing Development Finance Corp. and HDFC Bank Ltd. have begun to operate as a merged entity in India's largest corporate deal.
HDFC Bank, the nation's biggest private lender, will most likely start trading as a combined company on July 17. The board has fixed July 13 as the record date for determining which shareholders of HDFC are eligible to get the bank's shares. HDFC will be delisted from the stock exchanges.
Will There Be Fractional Entitlement?
Mergers and acquisitions create fractional entitlements of a share less than one full unit. That happens because companies combine using a predetermined share-swap ratio. Like in the case of the HDFC Bank-HDFC merger.
What's The Share-Swap Ratio?
A shareholder will get 42 fully paid-up shares of HDFC Bank for every 25 held in HDFC. To be eligible for HDFC Bank shares, investors need to have HDFC shares in their demat account on the record date of July 13. That means they should buy HDFC shares on or before July 12, as settlement takes two days (T+1).
Going by what usually happens, shareholders holding less than 25 shares in HDFC will most likely receive proportionate shares in HDFC Bank, and a fraction, if any, will be extinguished and paid at the current market price.
For example, an investor holding 15 shares of HDFC will be eligible for 25.2 shares of HDFC Bank [(42/25)*15]. The investor will likely get 25 shares of the bank, and the remaining 0.2 units will likely be paid in cash at the market price decided by the company.
In simple terms, 1 HDFC Share is equal to 1 HDFC Bank share plus 0.68 of the HDFC Bank share amount paid in cash.
To know more, send us your questions via email or Twitter, or ask us live on YouTube at 12 p.m. on Tuesday on BQ Prime.
