Corporate Actions, Dividends & Governance

Independent Director

A board member with no material pecuniary relationship with the company, its promoters or its management.

Test: the director meets the statutory independence criteria on relationships, remuneration and tenure, and is so declared annually qualitative

Insider Trading

Trading in a company's securities while in possession of unpublished price-sensitive information about it.

Test: the person is an insider, possesses unpublished price-sensitive information, and trades or communicates it without a legitimate purpose qualitative

Corporate Actions, Dividends & Governance

Insolvency and Bankruptcy Code

India's 2016 law establishing a time-bound process for resolving corporate insolvency or liquidating the company.

Test: on admission of a default, a resolution professional takes control and a resolution plan must be approved within the prescribed period or liquidation follows qualitative

Corporate Actions, Dividends & Governance

Interim Dividend

A dividend declared by the board during a financial year, before the annual accounts are finalised.

Test: the dividend is declared by the board mid-year and paid before the annual general meeting approves the final accounts ₹

Corporate Actions, Dividends & Governance

Liquidation

The winding up of a company, in which assets are sold and proceeds distributed to claimants in a legal order of priority.

Waterfall: liquidation costs, then secured creditors and workmen's dues, then employees, then unsecured creditors, then government dues, then preference shareholders, then equity ₹ crore

Corporate Actions, Dividends & Governance

Material Disclosure

A listed company's obligation to inform the exchanges of events that could affect its securities' price.

Test: the event meets a prescribed materiality threshold or the company's own policy, and is disclosed within the specified timeline qualitative

Corporate Actions, Dividends & Governance

Merger

The combination of two companies into a single entity, with one absorbing the other or both forming a new company.

Test: the transferor company's assets, liabilities and shareholders move into the transferee company under an approved scheme qualitative

Corporate Actions, Dividends & Governance

Minimum Public Shareholding

The regulatory requirement that at least a stated proportion of a listed company's shares be held by the public.

Test: public shareholding is at least 25% of total shares, with a longer timeline permitted for certain state-owned companies %

Corporate Actions, Dividends & Governance

Nomination and Remuneration Committee

A board committee responsible for recommending director appointments and setting executive pay policy.

Test: the committee consists of non-executive directors with a majority independent, and an independent chair qualitative

Corporate Actions, Dividends & Governance

Open Market Buyback

A buyback in which the company purchases its own shares on the exchange over a period, rather than through a tender offer.

Test: shares are acquired through normal market purchases within a stated price ceiling and time window qualitative

Corporate Actions, Dividends & Governance

Open Offer

A mandatory offer to buy shares from public shareholders, triggered when an acquirer crosses a control threshold.

Trigger: acquiring 25% or more of voting rights, or acquiring control; the offer must be for at least 26% of the expanded voting capital qualitative

Corporate Actions, Dividends & Governance

Ordinary Resolution

A shareholder resolution requiring a simple majority of votes cast in favour to pass.

Test: votes in favour exceed votes against among members voting, in person, by proxy or electronically %

Corporate Actions, Dividends & Governance

Preferential Allotment

An issue of shares to a selected group of investors rather than to all shareholders or the public.

Test: shares are issued to identified persons under a special resolution, at a price not below the floor set by SEBI's pricing formula qualitative

Corporate Actions, Dividends & Governance

Price-Sensitive Information

Information about a company that, if published, would be likely to materially affect its share price.

Test: a reasonable investor would consider the information relevant to a decision to buy, hold or sell the security qualitative

Corporate Actions, Dividends & Governance

Promoter Holding

The proportion of a company's shares held by its promoters and the promoter group.

Promoter Holding % = Shares Held by Promoter Group / Total Shares Outstanding x 100 %

Corporate Actions, Dividends & Governance

Promoter Pledge

Shares held by promoters that have been given as collateral against borrowing.

Pledge % = Pledged Shares / Total Promoter Shares x 100, disclosed quarterly %

Corporate Actions, Dividends & Governance

Proxy Voting

Authorising another person to attend a shareholders' meeting and vote on one's behalf.

Test: a valid proxy form is lodged with the company at least 48 hours before the meeting qualitative

Corporate Actions, Dividends & Governance

Qualified Institutional Placement

A fast-track issue of shares by a listed company to qualified institutional buyers only.

Test: shares are issued to qualified institutional buyers at a price at or above the floor derived from the two-week average of high and low prices qualitative

Corporate Actions, Dividends & Governance

Record Date

The date on which a company checks its register to determine who is entitled to a corporate action.

Test: the shareholder's name appears in the register of members or the depository records at the end of the record date qualitative

Corporate Actions, Dividends & Governance

Related Party Transaction

A transaction between a company and a person or entity connected to it, such as a promoter, director or group company.

Test: the counterparty meets the definition of a related party, requiring disclosure and, above thresholds, audit committee and shareholder approval qualitative

Corporate Actions, Dividends & Governance

Reverse Stock Split

A consolidation of several shares into one, raising the face value and the price proportionally.

New Share Count = Old Count / Consolidation Ratio; Adjusted Price = Old Price x Consolidation Ratio shares

Corporate Actions, Dividends & Governance

Rights Issue

An offer of new shares to existing shareholders in proportion to their holdings, usually at a discount to the market price.

Theoretical Ex-Rights Price = (Existing Shares x Cum-Rights Price + New Shares x Issue Price) / Total Shares After Issue ₹

Corporate Actions, Dividends & Governance

Scheme of Arrangement

A court-supervised process under company law for restructuring a company's capital, mergers, demergers or compromises with creditors.

Test: the scheme is approved by the required majorities of shareholders and creditors and sanctioned by the National Company Law Tribunal qualitative

Corporate Actions, Dividends & Governance

Share Buyback

A company purchasing its own shares from shareholders, reducing the share count.

Post-Buyback EPS = Net Profit / (Shares Outstanding - Shares Bought Back) ₹ crore