Corporate actions and the IPO

Reading for India · about 5 min

What this cluster is for

Most of the time, owning a share is uneventful. The price moves and you do nothing.

Then the company does something to the shares themselves. It splits them. It gives you more of them. It buys some of them back. It sells itself to somebody else. Or a private company you have never owned puts itself on the market for 3 days and asks for your money.

These are corporate actions, and they are the moments when a passive holder has to make a decision. They are also the moments when the largest, most avoidable mistakes happen, because the events look dramatic and most of them are not, while the 2 or 3 that genuinely matter look like paperwork.

These 8 lessons are built around a single sorting question: did cash cross the boundary between the company and its shareholders, or did the shares just get re-cut? Almost everything in this cluster follows from getting that right.

By the end of this cluster you will be able to:

See a holding halve in price overnight and know in 10 seconds whether anything happened
Work out from a record date whether you were eligible for a buyback or a bonus
Read a takeover offer and say what the gap to the offer price is paying you for
Find out, from a free document, why a company is going public and who benefits
Read the anchor investor list before the public can apply
Turn a price band into a valuation multiple and compare it with a stock you already own
Put a newly listed company's lock-in expiry dates in your calendar before you buy
Calculate your real odds of an IPO allotment, from the published document

Nothing here names a stock to buy. Everything here should still work in 2036, on a company that does not exist yet.

What you should read first

This cluster assumes 1 lesson from cluster 1: in the primary market the seller picks the price and the date, and in the secondary market you do. If you have not read Where shares come from: the primary and secondary markets, read it before article 4. It also covers the fresh issue against offer for sale check, which this cluster builds on rather than repeats.

The reading order

The first 3 articles are about things that happen to a company you already own. The last 5 are about a company becoming buyable for the first time. Read them in order.

When you already own it

When a stock changes shape: splits, bonuses and buybacks — splits and bonuses re-cut the cake. Buybacks and rights issues move real money, and in India the tax on 1 of them changed completely in October 2024.
Offer for Sale: how large shareholders sell through the exchange — a big holder selling in 1 day. The company receives nothing, and the floor price measures the seller's urgency.
Mergers and acquisitions: what happens to your shares — cash fixes your outcome, a share swap moves you into the buyer, and the gap to the offer price is paying you for time or for risk.

When it is becoming buyable

What is an IPO, and why does a company go public? — companies list for 6 reasons and the reason is written down. Count the quarters of public record you are buying.
The players in an IPO, and what the bank is actually paid to do — the lead bank works for the seller and is paid on the amount raised. Nobody in the process is paid to tell you the price is high.
How an IPO is priced: fixed price and book building — the band is an asking range. Do the work at the cap, using the Basis for the Issue Price section.
The full IPO timeline, every date explained — 12 dates, and the 2 that decide your first year are months after listing.
Applying for an IPO, allotment and listing day — in India the draw picks applications, not amounts. In the United States an easy allocation is itself a warning.

The checklist

Every article ends in something you do with your own data. Collected here, they are 1 evening's work, and they are the most valuable thing in this cluster.

On the holdings you already own

Open the corporate action history for 1 long-held stock. Confirm that a split or bonus changed your quantity and your average price by the same ratio, and your total value by nothing. (1)
For any buyback or dividend you received, check your trade date against the record date. Were you actually eligible? (1)
Check each holding's corporate announcements and bulk and block deals for a large sale by a promoter, a government body or a fund. Mark the date on the chart. (2)
Write down each holding's promoter percentage. Note which ones are above 75%, and which have no controlling group at all. (2, 3)
Work out how many percentage points of each company are available before somebody would cross the 25% open offer trigger in India. (3)

Before you buy anything newly listed

Find the listing date of every holding. Add up what percentage of your portfolio is in companies with less than 3 years of public record. (4)
Read the Objects of the Issue and the first 5 risk factors of the newest one. (4)
Read the anchor investor list, published 1 working day before the issue opens in India. (5)
Write down the issue expenses as a percentage of the amount raised. (5)
Open Basis for the Issue Price. Write the implied multiple at the cap, then look up a listed peer in your own app. (6)
Finish the sentence: "I am paying a premium to a listed company because ______." (6)

Dates to put in your calendar

Anchor lock-in expiry, 30 days and 90 days from allotment, for any Indian listing you hold. (7)
Insider lock-up expiry for any US listing you hold — and the early-release conditions in the same paragraph. (7)
The first 2 results announcements of any company listed in the last year. (7)

Before your next IPO application

Count your own applications against your own allotments. That is your lottery rate. (8)
Open the basis of allotment document for 1 issue you missed. Divide allottees by applications. Those are the real odds. (8)
Write both sentences before you apply: what you do if you get shares, and what you do if you do not. (8)
Apply for more than 1 lot only if you want to own that many shares at that price. (8)

India and the United States, equally

Every article covers both markets at the same depth and then says where they diverge and what the divergence tells you. In this cluster those sections are unusually load-bearing, because corporate actions are where the 2 systems are most different.

Four divergences are worth knowing before you start.

Buyback tax runs in opposite directions. In the United States the company pays a 1% excise tax and the shareholder is taxed only on a gain when they choose to sell. In India, since 1 October 2024, the shareholder is taxed on the entire amount received, at slab rate.
Takeover protection arrives at different times. In India a mandatory open offer gives minority shareholders a price and a deadline before the fact. In the United States there is no such rule, and the protections are a shareholder vote, directors' duties and, if it comes to it, a Delaware court.
IPO allotment is impersonal in India and commercial in the United States. A reserved retail quota and a computerised draw, against an underwriter's discretion. That single difference changes what a retail investor should worry about in each country.
India has a grey market premium and the United States does not. India also publishes live subscription data. Both create urgency during a 3-day window, and neither is a valuation.

A great deal of investing advice reaching Indian readers was written for American conditions. On corporate actions it is not merely imprecise. It is often the opposite of correct.

A note on the flags

Several statements in this cluster carry a mark. Those are tax rates, thresholds, timelines and regulatory rules — the things that change, sometimes twice in 3 years. India's buyback taxation changed in October 2024, the IPO listing timeline moved from T+6 to T+3 in 2023, and the Income-tax Act 1961 has been replaced by the Income-tax Act 2025.

A flagged number is not a number we doubt. It is a number you should confirm against the current rule before you act on it, because the rule is the kind that moves.