This article explains the various corporate actions handling in the smallcase ecosystem.
| Corporate Action Adjustment Logic | ||
| Corp actions | Model portfolio (smallcases) | User’s portfolio/holdings |
| - Shares consolidation - Scrip issue/Bonus - Share split | - Number of shares (used for our internal purposes, calculated on each rebalance from the index value of the smallcase) of the affected stock in the model portfolio is divided by the adjustment ratio shared by the company. - No impact on the index series, returns and the weight of the stock in the portfolio - Applied on ex-date automatically before market open | - Adjustment ratio will be used to adjust the number of shares in the user's holdings & the avg. buy price will also be adjusted as per the adjustment ratio - No impact on user returns as the increase/decrease in price is offset by decrease/increase in number of shares - Applied on ex-date automatically before market open |
| - Stock suspension - Stock delisting | - The weights of the delisted stock is re-distributed propotionally into the remaining stocks of the portfolio - Stock suspension & delisting is applied before market open on the delisting date - No impact on the index series and the returns of the smallcase | - The value of the user's delisted/suspended holdings is transferred to the user's realized returns with no impact on the user's overall returns - Stock suspension is not applied on the user portfolio - Stock delisting is applied on the user portfolio before market open on the delisting date |
| - Rights issue - Capital Reduction | - Number of shares (used for our internal purposes, calculated on each rebalance from the index value of the smallcase) of the affected stock in the model portfolio is divided by the adjustment ratio shared by the company. - No impact on the index series, returns and the weights of the stocks in the portfolio - Applied on ex-date automatically before market open | - User can reach out to smallcase support and we can increase the number of shares |
| - Demerger/spin-off | - Based on the demerger ratio, the weight of the demerged stock will be reduced when compared to pre-demerger weight. The reduced weight is re-distributed proportionately among all the remaining stocks - This is applied on the ex-date between 9:45 - 10 am after the auction is completed and data is available to calculate the demerger ratio - Once the demerged shares start to trade, we re-assign the originally reduced weight to this stock, and proportionately re-distribute the weights of all remaining stocks. - This is done post the market hours of the first trading day after the new shares starts to trade. - No impact on the index series and returns of the smallcase | - Average buy price of the stock in the user holdings will be adjusted on the basis of demerger ratio - The value of the user's demerged holdings will be transferred into realised returns and the number of existing shares will not be affected - This is applied on the ex-date between 9:45 - 10 am after the auction is complete On the Payout Date: The adjustments made on the ex-date are reversed, and the newly issued stock is added to the user’s smallcase according to the corporate action ratio. Users will also see the new stock in their demat accounts. Any fractional shares, for which the user receives cash instead, are added to the realized return in the user’s smallcase on the payout date. |
| - Amalgamation / Merger | - The weight of the delisted stock is re-distributed proportionately into the remaining stocks of the portfolio. This is applied before market open on the ex-date. - Once the new shares start to trade, we re-assign the originally reduced weight to this stock, and proportionately re-distribute the weights of all remaining stocks. - This is done post the market hours of the first trading day after the new shares starts to trade. | On the Ex-Date: The user’s investment and returns in the delisted stock (e.g., Company A) move to realized investment and realized returns, ensuring the overall returns on the smallcase remain accurate. On the Payout Date: The ex-date adjustment is reversed, and shares of the merged company are added to the user’s smallcase based on the swap ratio. Any fractional shares, for which the user receives cash, are added to the realized return on the payout date. |