In the stock market, a merger is when two companies combine to form a single entity, with the goal of creating a stronger, more competitive business.
Typically, one company absorbs the other, or both join to form an entirely new company. Shareholders of the merged company usually receive shares of the new/combined entity in exchange for their old shares, based on a predetermined swap ratio.
Example:
If Company A merges with Company B, shareholders of Company B might get, say, 2 shares of Company A for every 3 shares they currently own, and the combined company will trade under a single ticker.
After a merger, the new shares are usually credited to your demat account within about 7–15 working days from the merger’s effective date, once the share swap process is completed by the company’s registrar. The exact timing depends on the swap ratio calculation, regulatory approvals, and whether the merged entity is already listed or needs a fresh listing. The confirmed credit date is always provided in the company’s corporate action notice or the stock exchange announcement
After a merger, your old shares are cancelled or extinguished and replaced with new shares of the merged entity, according to the agreed swap ratio.
1. If the other company already trades on the exchange, you’ll receive its shares directly in your demat account, and your old shares will disappear from your holdings.
2. If the merged entity is a newly listed company, your old shares will be removed, and the new shares will be credited once the listing is complete.
3. If there’s a cash component in the deal, you’ll receive that payment in your bank account along with (or instead of) new shares.
You are eligible to receive shares of the merged company if you are a registered shareholder of the merging company on the record date announced for the merger.
1. Record date – The company sets this date to determine which shareholders will get new shares under the agreed swap ratio.
2. You must buy the shares before the ex-date (usually 1 business day before the record date in India’s T+1 settlement system) so that they’re in your demat account by the record date.
3. Eligibility is automatic — if you hold shares on the record date, the registrar will credit the new shares to your demat account once the allotment is completed.
