1. Bonus issue in India sends Wipro ADRs plunging in US; company in damage control

Bonus issue in India sends Wipro ADRs plunging in US; company in damage control

Wipro's ADRs fell over 47 percent to $10.45 in pre-market trading on the New York Stock Exchange yesterday on the news of fixing the record date for bonus share issue in India.

By: | Updated: June 13, 2017 11:04 AM
Wipro said that in view of yesterday’s market activity in its stock, the NYSE has contacted the company in accordance with its usual practice. (Image: Reuters)

Wipro’s ADRs fell over 47 percent to $10.45 in pre-market trading on the New York Stock Exchange yesterday on the news of fixing the record date for bonus share issue in India before the company moved in to contain the damage, while the exchange suspended trading in Wipro ADRs.

ADRs are instruments denominated in US dollars and the underlying shares are that of a foreign company. Wipro’s ADRs have seen steep volatility after the company fixed June 14 as the record date for  a bonus share issue to the shareholders in India.

Wipro quickly moved in to control the situations, clarifying that the dates for bonus payout in American ADRs are yet to be finalised. “The company felt that it was important to clarify to the market that the payable date and ex-dividend date for its ADR (American Depository Receipts) bonus issue, or stock dividend, are yet to be determined,” Wipro said in a filing to the exchanges.

The company added that in view of yesterday’s market activity in its stock, the NYSE has contacted the company in accordance with its usual practice. According to Wipro, at NYSE, for ADR stock dividends or bonus issue, the ex-dividend date is set as the first business day after the stock dividend is paid, which is also after the record date.

“Therefore NYSE has not yet declared an ex-dividend date for Wipro’s ADR program. Once the payable date is declared NYSE will announce the ex-dividend date for the ADR,” the filing said.

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Back home, Wipro’s board of directors fixed June 14 as the record date to determine eligible shareholders entitled to receive the bonus equity shares/stock dividend, and the same was communicated to the stock exchanges on May 30.

Wipro made an announcement on bonus shares on April 25, 2017. The ratio was one bonus share for every existing equity share. The record date for bonus issue is June 14, 2017, while the ex-date for the same is June 13.

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